Consumer stocks and premium valuations

Current valuations and investor thinking do not seem to be in line with disruption in consumer space

It has become very fashionable these days for every investor to talk about buying consumer franchises and holding them forever. This is understandable as the strategy has worked remarkably well over the past few years. There are numerous consumer stocks in India which have delivered outsized returns for their investors. Many of these stocks now trade at nosebleed valuations. Forty or 45 times earnings have become par for the course. Still no one wants to sell. It has been drilled into these investors that one should never sell a consumer franchise with a strong moat. A moat is the competitive