CMP 1006 BSE 16371
Continuing with the FMCG/CONSUMPTION space theme, we will now analyse Colgate Palmolive in order to try and ascertain the Best Entry Price.
TECHNICALS:
A study of the long term Price Charts shows that the unconventional SMA 250 is a reasonably good long term support for the Scrip. In the past 2 years it has been violated only marginally in the Periods 1/2/2011 to 3/2/2011, 22/2/2011 to 25/2/2011, 22/3/2011 to 1/4/2011 on a closing basis. The violation has ALWAYS been marginal and the bounceback swift and sure. Other than these three periods, the 250 SMA has NEVER been violated duing the last two years. The 250 SMA currently is at 911. CMP is at 1006. The price charts further indicate strong supports at 987 followed by 966 and then 944.
FUNDAMENTALS:
There is no doubt that the Scrip has a lot going for it; great pedigree and corporate governance, tremendous Brand Pull, good consistent topline growth, has more or less held OPMs above 20% despite the high inflation trend, agile stategic positioning in response to changing trends etc etc. The only bug that I see is that the Bottom line for the last three odd Quarters has been taking a wee bit of a hit QOQ as well as YOY, which is never a welcome sign. However, this is obviously not enough to sully the terrific reputation of the Scrip but is definitely a sign that astute Investors need to exercise caution while deciding upon optimum Entry levels for this Scrip.
At CMP 1006 the Scrip trades at PE 36x TTM basis. If the Company can hold its margins at least in the coming Quarters or even improve upon them a bit on the back of a possible easing in input costs etc AND give a topline growth in the region of 15% we could see it do an EPS of about Rs 34 in FY12. which puts it at about 29x FY12E at CMP 1006. Frankly, hand on heart, I think doing 34 bucks this FY will be rather difficult; so the Current valuations even on an optimistic basis are very stretched. Having said all this, pedigree comes at a Price and I don't really see the Scrip correcting massively to oblige us with a safer Entry point.
Therefore, to separate the meat from the bone as they say, the Best Entry range for Colgate would be in the 910-950 range. Wait for bad days or a particularly bad Quarter and buy in staggered lots to get an average Buy Price as close to 900 as possible. More importantly, going ahead, do not expect explosive returns since other sectors could find greater favour in the near future; But stability to the Portfolio definitely shall be imparted by this Scrip bought as close to 900 as feasible.
- YOU MAY ALSO LIKE TO PERUSE THIS POST FOR MORE INPUTS .
- COLGATE Q2 FY2012 RESULTS
Continuing with the FMCG/CONSUMPTION space theme, we will now analyse Colgate Palmolive in order to try and ascertain the Best Entry Price.TECHNICALS:
A study of the long term Price Charts shows that the unconventional SMA 250 is a reasonably good long term support for the Scrip. In the past 2 years it has been violated only marginally in the Periods 1/2/2011 to 3/2/2011, 22/2/2011 to 25/2/2011, 22/3/2011 to 1/4/2011 on a closing basis. The violation has ALWAYS been marginal and the bounceback swift and sure. Other than these three periods, the 250 SMA has NEVER been violated duing the last two years. The 250 SMA currently is at 911. CMP is at 1006. The price charts further indicate strong supports at 987 followed by 966 and then 944.
FUNDAMENTALS:
There is no doubt that the Scrip has a lot going for it; great pedigree and corporate governance, tremendous Brand Pull, good consistent topline growth, has more or less held OPMs above 20% despite the high inflation trend, agile stategic positioning in response to changing trends etc etc. The only bug that I see is that the Bottom line for the last three odd Quarters has been taking a wee bit of a hit QOQ as well as YOY, which is never a welcome sign. However, this is obviously not enough to sully the terrific reputation of the Scrip but is definitely a sign that astute Investors need to exercise caution while deciding upon optimum Entry levels for this Scrip.
At CMP 1006 the Scrip trades at PE 36x TTM basis. If the Company can hold its margins at least in the coming Quarters or even improve upon them a bit on the back of a possible easing in input costs etc AND give a topline growth in the region of 15% we could see it do an EPS of about Rs 34 in FY12. which puts it at about 29x FY12E at CMP 1006. Frankly, hand on heart, I think doing 34 bucks this FY will be rather difficult; so the Current valuations even on an optimistic basis are very stretched. Having said all this, pedigree comes at a Price and I don't really see the Scrip correcting massively to oblige us with a safer Entry point.
Therefore, to separate the meat from the bone as they say, the Best Entry range for Colgate would be in the 910-950 range. Wait for bad days or a particularly bad Quarter and buy in staggered lots to get an average Buy Price as close to 900 as possible. More importantly, going ahead, do not expect explosive returns since other sectors could find greater favour in the near future; But stability to the Portfolio definitely shall be imparted by this Scrip bought as close to 900 as feasible.
- YOU MAY ALSO LIKE TO PERUSE THIS POST FOR MORE INPUTS .
- COLGATE Q2 FY2012 RESULTS
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