Procter and Gamble has been earning a return of at least 28% on its net worth per year from 2000 to 2008. It has earnings per share of around Rs. 52 in the last 12 months.
Procter and Gamble has a cash and bank balance of around Rs. 1000 million. It has net current assets of around Rs. 2000 million. It has a net worth of around Rs. 3000 million. It has a market capitalization of around Rs. 39000 million.
At a market price of around Rs. 1200 and earnings of around Rs. 52 the initial rate of return is less than 5 per cent which we could easily get in a fixed deposit! However the value of the company according to me should be around Rs.1500 considering its good long term and short term record.
Procter and Gamble makes Personal Care products and has no debt. Competitors are HUL, Dabur India, Colgate, Godrej Industries and Godrej Consumer.
