Wait on the sidelines in FMCG; betting on bearing stocks: Chakri Lokapriya

economictimes.indiatimes.com:

Chakri Lokapriya, Managing Partner, RSB LLP, says if you look at the bearing companies, this quarter, they are all reporting like 30-40% revenue growth, 30-40% EPS growth and trading at about 25-30 times. So, this as a segment will continue the earnings growth and stock performance for the next two-three years easily.”

Coming to the FMCG space, given that we have seen these stocks will be in the spotlight on the back of the earnings, a lot of brokerages are talking about how the companies are losing the growth fervour and that there is a little bit of competition when it comes to pricing, the path to the consumer, etc. Are you worried about the long-term track record?
Chakri Lokapriya: Marico's results showed that their volumes grew in line, slightly better than expectations.

The pricing was clearly not there. On the other hand, there is a broadening of demand. So, that was a good thing.

And on the other hand, simply because it was better than expectations and the stock has kind of been ignored for a long time, there was this rush towards Marico and the other names. It is more a one-off story kind of thing that is all done and dusted. Yes, the company looks fine and the same story holds together for the other FMCG names.

So, they are all pretty much trading right up there in terms of their valuations. While there are all these so-called green shoots in rural, etc, that would not materialise to earnings, in another couple of quarters down the road. So, let us wait and watch on the sidelines until then.

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