Food, Beverage & Tobacco Sri Lankan Community

Browns Investments PLC, a subsidiary of LOLC Holdings PLC, is poised for exceptional performance in the coming years, driven by a confluence of strategic advantages and favorable market conditions. Diversified Portfolio and Strategic Investments: Browns Investments boasts a diversified portfolio spanning key sectors of the Sri Lankan economy, including leisure, agriculture, plantations, construction, and real estate.

Intrinsic Value per Share (DCF-based): Rs. 40.00 Current Market Price (CMP): Rs. 80.00 ⚠️ Overvaluation: CMP is 100% above intrinsic value! Key Concerns and Valuation Risks Overpriced Relative to Intrinsic Value Even under an optimistic growth scenario (10% FCF growth), the stock’s intrinsic value only reaches Rs. 57.

Intrinsic Value per Share (DCF-based): Rs. 1,561.93 Current Market Price (CMP): Rs. 295 Undervaluation: CMP is 81% below intrinsic value! Key Strengths and Growth Potential 🟢 Strong Profitability & Cash Flow Net Profit Margin: 23.58% (higher than industry average) Free Cash Flow Yield: 52.13% (indicates strong cash generation) Earnings Yield: 24% (suggests high return potential) 🟢 Exceptional Financial Health Debt-to-Equity: 0.00% (No debt burden, reducing financial risk) Current Ratio: 7.49 (indicating strong short-term liquidity) Cash per Share: Rs. 29.72 (high cash reserves provide safety) 🟢 Attractive Valuation Metrics Price-to-Earnings (P/E) Ratio: 4.4 (well below the market average) Price-to-Book (P/B) Ratio: 0.78 (trading below book value) PEG Ratio: 0.37 (suggests strong earnings growth at a cheap price) 🟢 Robust Growth and Shareholder Returns Compounded NAVPS Growth (10 years): 19.94% (23.03% if dividends reinvested) Sustainable Growth Rate: 11% (supports long-term expansion) Dividend Yield: 9.1% (solid passive income potential) Dividend Payout Ratio: 42% (balanced between growth & shareholder returns) DCF-Based Valuation Breakdown Base FCF: Rs. 2,258.66 Mn (strong cash flow foundation) Discount Rate: 12% (reflecting conservative risk assumptions) Terminal Growth Rate: 2% (aligned with economic conditions) Projected FCF Growth: CAGR 11.49% (consistent growth trajectory) Final Verdict: STRONG BUY Intrinsic Value (Rs. 1,561.93) is over 5x the CMP (Rs. 295) , making this stock a deep value opportunity.