All FMCG companies tend to have relatively high PE ratios vs companies that are into lets say manufacturing or even IT space. I feel these high ratios are partially justified because the valuation of a company is not based solely on the earnings but also the assets. All FMCG firms have brands that they have built up over decades along with strong distribution channels and vendor partnerships. Nestle is spending 750CR per annum on advertising and all of this cements the MOAT. It has taken ITC over 10years to finally turn its FMCG ventures somewhat profitable (even now Yipee! is a far 2nd to Maggi but definitely ITC is on the right track in general). That is just my opinion on the matter, would be very happy to have a healthy discussion on how we should value the intangible assets that these companies possess!
Disc - invested in nestle and ITC.
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