This week, with BIICI (Best Indian Companies to Invest In) library, I have a fantastic candidate for Indian value investors, GlaxoSmithKline Consumer Health care, which generally known as GSK Consumer Care. GSK is a world class brand name operating in India since 1919, with nutritional drink and OTC segments. Virtually no other companies in India to consider as their competitors and GSK is a best example for a company with clear monopolistic business, with multiple products, that any value investor love to have.
GSK consumer care equipped with extra ordinary product portfolio. Started on 1920, its classic product Horlicks, never left any room for its competitors and still enjoying its monopolistic position as the top nutritional brand in India. Another brand ‘Boost’, a chocolate nutritional drink, is the example for another product from GSK with monopolistic position in Indian Market. With its vision to expand business to new segments, GSK introduced two biscuit brands, boost and horlicks biscuits, to Indian public.
The most interesting factor that support value investors to consider GSK Consumer Care to invest is, it is a Zero Debt company with no existing loans but enough surplus amount in hand. When coming to the management efficiency side, GSK has well dedicated and innovative management team to lead company to new heights. Company recently introduced Women’s Horlicks, first health drink designed specially for women population in India.
If you move further to the product portfolio of GSK Consumer care, we can find various brands of Horlicks like Junior Horlicks, Mothers Horlicks, Womens Horlicks and various favors within it. If you take a look into another nutritional product Boost, India’s leading malt-based Health Food Drink in a chocolate flavor, still maintaining its monopoly intact with malt-based Health Food Drink in Indian market from 1975, when it launched as first to market. GSK Enjoying its top position with other brands like Viva and Maltova as well.
When go further to the OTC product portfolio, we can see three major OTC products, Crocin, ENO and Iodex, with GSK’s OTC portfolio. If you are in India, an introduction not necessary with these products. These are so famous brands in its kind compare with similar available products in our market today.A well disciplined multinational with network all over India, operating for last 80 years, having fantastic portfolio of monopolistic products and zero debt status made GSK is a true value pick. Its year to year growing sales, profits, per share earning, surplus and status as one of the best dividend payer, support our thoughts to move close to GSK and invest it when the shares reaching to the right price level.When Glaxo prices reached to Rs. 451 some months back, it was showing an initial rate of return as high as 11%. Now when the prices reached to Rs. 923 the initial rate of return went down to 5.6% compare with it present per share earning Rs.51.28. As a value investor, we should wait further to get this fantastic candidate in a price level of Rs. 550-600 to confirm getting an initial rate of return of 8 to 9% compare with its 2008 EPS Rs.51.28.Of course, GSK Consumer is a best buy for value investors with long term focus. By considering all the supported factors with value investing criteria, GSK has a defensive nature and take enough time to grow your investments to the next handsome level if you keep invested in.
GSK Consumer Care is the second company analyzed under the series of TMM’s BIICI (Best Indian Companies to Invest In) series. You can access the BICII calendar to know about the forth coming companies in this series.
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Note: GSK Consumer Care is the sole owner of any logo or product featured in this article.