Colgate may test Rs 1150 in next 6 months: Aashish Tater

Aashish Tater of fortunewizard.com told CNBC-TV18, "Colgate Palmolive is a strong brand equity and MNCs in this space especially the FMCG pack has been looking to increase stake. We feel after Hindustan Unilever (HUL), GlaxoSmithKline Consumer Healthcare is the next bet that will be seeing an open offer from the promoter side. If you see the Colgate-Palmolive international balance sheet or Indian balance sheet, they are sitting on huge cash, decent return on equity." "We felt that if the company goes from 51 percent to 75 percent, the open offer size should be somewhere between Rs 1,225 -1,300 odd. So if that happens even in next six months or one year that is what our timeframe outlook is, the stock before that will definitely go and test Rs 1,150 mark which will be still decent 20 percent return from current market price. So, we feel there is lot of upside potential. The downside is capped because any four-five percent dip there will be domestic institutional investor (DIIs) that will be buying into the stock," he said. "The results have been very good. In fact even on cost saving front their new factory has come in and doing pretty well even in the first year of run. Going forward, companies with better return on equity and good growth potential in terms of that will be having a stable growth over next two to three years and it will definitely see higher valuations in terms of price to earnings and expansion. So, that will be a trigger for the stock. So, we feel that this stock can easily test Rs 1,150 from next six months time horizon and even higher levels from a year’s perspective."