August 14th 2017 – MRF and Godrej Consumer products

I am happy to share that I am buying two more stocks with a 20% per annum ROI expectation over 3 years period.

The first is Godrej Consumer products – this is the third largest FMCG company after ITC and HUL in India – the company has 50% of its revenues coming from its business outside of India. It is in hair color, household insecticides (HIT and Good Night brands) and soaps ( Cinthol brand), airfresheners etc. Their 10 year sales CAGR has been 29% and EBIDTA and EPS CAGR has been 27%. With a high Return on Equity of 27% -the stock has given CAGR of 30% over ten years. At the current price of 920 – I am happy to invest in this company – I expect it to give me 20% per annum over long term .

The second stock is MRF – it is the highest priced stock in Indian markets today. As you know, it is a market leader in tyre industry in India. The industry has high dependency on rubber prices and the problem is that the industry cannot easily pass on the rubber cost increases to the market.The market is very competitive with many Indian players and with chinese tyre imports as well. In this tough market, MRF has built its market share profitably. Over the past 5 years, it’s top line growth is 6% and bottom line growth is 33%. In the past ten years, the earnings per share has grown at 34%. It has a very healthy return on equity of 26% over the past five years. The stock has given a CAGR of 30% over ten years. At the current price of Rs64700, I am happy to invest in this stockas I expect a ROI of 20% per annum over long term.