Khaitan (India) Limited (NSEI:KHAITANLTD), a INR₹250.56M small-cap, is a consumer staples company operating in an industry which has been a consistent performer over time due to its robust consumer demand throughout economic cycles. Consumer staple analysts are forecasting for the entire industry, a strong double-digit growth of 17.33% in the upcoming year . Today, I’ll take you through the sector growth expectations, and also determine whether Khaitan (India) is a laggard or leader relative to its consumer staples sector peers. Check out our latest analysis for Khaitan (India)

What’s the catalyst for Khaitan (India)’s sector growth?

Disruption from consumers is becoming more prominent than that of industry competitors. Consumers are predominantly leaning towards more health-conscious alternatives such as whole and raw ingredients. Furthermore, companies that are now emerging are latching on these trends with efficient business models. In the past year, the industry delivered growth in the twenties, beating the Indian market growth of 12.84%. Given the lack of analyst consensus in Khaitan (India)’s outlook, we could potentially assume the stock’s growth rate broadly follows its food product industry peers. This means it is an attractive growth stock relative to the wider Indian stock market.

Is Khaitan (India) and the sector relatively cheap?

The food product industry is trading at a PE ratio of 24x, lower than the rest of the Indian stock market PE of 29x. This illustrates a somewhat under-priced sector compared to the rest of the market. Furthermore, the industry returned a higher 12.29% compared to the market’s 9.78%, making it a potentially attractive sector. On the stock-level, Khaitan (India) is trading at a lower PE ratio of 9x, making it cheaper than the average food product stock. In terms of returns, Khaitan (India) generated 13.01% in the past year, in-line with its industry average.

What this means for you:

Are you a shareholder? Food product stocks are currently expected to grow faster than the average stock on the index. This means if you’re overweight in this sector, your portfolio will be tilted towards high-growth. Furthermore, the sector is trading at a discount to the market, providing an opportune time to accumulate more shares in food product.

Are you a potential investor? If you’ve been keeping an eye on the food product sector, now is the right time to dive deeper into the stock-level. Given the high growth prospects, as well as the lower PE relative to the broader market, there is plenty of opportunity to profit from growth in addition to undervaluation.