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Friday, September 16, 2011

Marico Industries - An honest FMCG stock

Recently, management of Marico Industries, a good FMCG company, talked about their stock from investor's perspective. They actually guided the investors with a warning that investors should not be too optimistic about Marico stock for may be couple of quarters due to various business reasons.

One of the reason they sight for slow growth/no growth is rise of input cost of raw material at almost 80%.

Another reason is political unrest in Africa and Middle east where company has been doing business which is almost 0 now.

And the third reason is in anticipation of domestic economic slowdown. With ever rising high inflation, purchasing power of people is bound to be less and people would be willing to spend less on FMCG products.

Sighting all three reasons, company management wants it's stock investors to not to expect high growth from company for next may be 2-3 quarters. It is an appreciable effort from management compared to most of the managements who keep misguiding small investors with artificial high growth promises!

As a result, stock has corrected more than 10% in a day. It may slip down upto 120 range where it could be a good stock to buy for long term.

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