Defence
Note: All numbers are as of 2nd August’24 on TTM basis
- Lockheed, the world’s defense titan with an order book 15 times heftier than HAL’s, has a market cap only 3.5 times larger
- HAL has a M-Cap 0.75x of BAE Systems’, but HAL achieves that with just one-seventh of the order book
- HAL’s largest fighter jet order ever is 97 ‘Tejas Fighters’ whereas LMT routinely produces around 150 ‘F-35s’ every year
TRIVIA: Lockheed Martin launched its 5th Gen F-22 raptor in 2005 whereas HAL is still working on Tejas which is 4.5 Gen aircraft
Luxury Goods
Note: All numbers are as of 6th August’24 on TTM basis
- Gucci (owned by Kering) & Cartier (owned by Richemont) are amongst top 10 most popular luxury brands globally
- Titan has 1/3rd the revenue of Kering SA but trades at a similar market cap
- Richemont, a home of 15 luxury brands like Cartier, Vacheron Constantin, IWC Schaffhausen trades at a lower PE than Titan
- Signet Jewelers, world’s largest diamond retailer, with a similar revenue of Titan, trades at single digit multiple of 6x
Luxury Watches
Note: All numbers are as of 2nd August’24 on TTM basis
- Swatch manufactures and retails watches for multiple luxury brands, whereas Ethos only retails watches and still trades at a higher PE valuation of 87x compared to Swatch’s PE of 11x
- Swatch’s sales is 73X of Ethos and M-Cap is only 13x of Ethos, making M-Cap/Sales of only 1.3x compared to 7.5x in Ethos
- Swatch Group has a dividend yield of 3.5%, whereas Ethos pays no dividends
- Swatch’s profit is 60x that of Ethos, yet its M-Cap is just 10x
HVAC
Note: All numbers are as of 2nd August’24 on TTM basis
- In the last 5 years, Bluestar’s profits have increased 2.6x while during the same time M-Cap has shot up 5x
- Bluestar India has a capacity of 1 million units/annum compared to 2.5 million units/annum just for Daikin India
- Daikin is the world’s largestair conditionermanufacturer with 24x the Revenue of Bluestar but only 10x the Market Cap
TRIVIA: Daikin India (<5% of the company) recorded revenue of $1.26 Bn vs Bluestar India with a total revenue of $1.2 Bn
Food Delivery
Note: All numbers are as of 20th August’24 on TTM basis
- Meituan’s delivery revenue outpaces Zomato’s by 12x, but its market cap is only 3x*
- Meituan’s $12 billion net cash position is 14% of its market cap; Zomato’s barely hits 2%
Zomato handles just 3% of Meituan’s 21,893 million orders, yet its market cap is 32% of Meituan*
Lot if comparisons are correct.
I wanted to state that meituan vs Zomato the cagr difference is 14%. Over a next 5 years growth of Zomato at this base can lead to big wealth creation. Also blink it is growing by cagr of 80% so these growth numbers are not sustainable at this rate by even 45% growth can lead to much further upside.
Another question is, higher CAGR is sustainable for how long? And if the premium paid is justified. The risk to reward ratio also needs to be factored
Very well articulated comparison, but potential of growth and macros support India which in turn reflect in high PE. But still in mana cases such hefty valuation can never be justified. Some fundamentals take back seat when liquidity is playing its game.
While the comparison makes sense, what about the comparison growth figures of last 3-5 years? Where does that leave us…your thoughts?
We have highlighted 5 year growth numbers while comparing Bluestar & Daikin.
Multiple different parameters are taken into account across domain to have a comprehensive view at the valuations.
Great article, however revenue comparison graph of Zomato & Meituan could been better.
Feedback noted.
I think so that these comparison must be made and also Charlie said in one of Berkshire AGM that they don’t teach relative valuations in business school because it’s hard to teach and only sane way to invest. These comparisons help to lower your expectations, put you correctly in back-foot while investing to think and ponder upon whether these are excesses which are worth participating in.