Marico a good bet in FMCG space, says Shanbhag

Marico is a good bet in FMCG space, says Ganesh Shanbhag, CEO, SMS Financial Services.

Shanbhag told CNBC-TV18, “FMCG place seems to be quite interesting. Though everybody says it’s expensive, but we need to look at Marico a slightly different manner because the Singapore government and a clutch of investors are investing close to around Rs 500 crore in the company.”
He further added, “The equity valuation is just around Rs 2.6 crore and the reserves which will go up is around Rs 497 crore and they are acquiring the Paras Pharmaceutical business which is going to be in sync with the current business that they already have. It has a dominant share in the coconut oil segment. So I think it seems to be a good bet. Because the equity placement is being done at around Rs 170 I think the downside could be around Rs 170 over here and the upside will be very dent over here.”
“In PSU banking, there is a lot of pressure because the NPA write-offs that we are seeing in most of the PSU banks and that are actually taking a major hit. But in spite of all this we can yet see the dividend payouts of most of these banks are quite stable. So that’s a difficult stand because in spite of the NPA being written off, they are paying out decent dividends.”
“Colgate Palmolive (India) looks very interesting because again in the FMCG space what is happening in Colgate is the equity is just around Rs 13 crore and on equity of Rs 13 crore, the PAT is going to be around Rs 430 crore and amazingly this company distributes 70-75% of its net profit every year. That’s a huge amount. You don’t find a many corporate doing that in India and you get a dividend every quarter. I think in bad and volatile times these are the stocks to take cover in actually.”