Prime Stock Recommendation: An MNC pharma play for passive income
This company is unlikely to deliver scorching growth rates but is a good fit for investors seeking steady growth.
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9 thoughts on “Prime Stock Recommendation: An MNC pharma play for passive income”
Abbott India has majority OTC products (except some of course). Its a story of great brand building & quality assurance. But majority of new products go to unlisted Abbott healthcare and listed Abbott only produces only new formulations of existing products/chemicals only. Hence the lack of growth. It’s a bad corp governance practice followed by most MNC pharma cos. in India. Any comments about this please ?
Thanks.
Hello Sir,
Thank you for your comment sharing your thoughts. Your points on Abbott India limited producing only new versions of existing products is true. While they have over the last few years launched new products, most of these have been versions / improvisation of existing ones. However, this is something we know about Abbott India Limited. We have looked at Abbott India Limited as a business unit, its fundamentals, products, prospects, financials and valuations as the basis of our recommendation. We find that despite the points highlighted by you, they have managed the steady growth and expect that they will maintain a similar momentum.
Hope this addresses your query.
Thanks
with 9% growth, does it not expensive to give 40+ pe ?
Hello,
We believe Abbott’s stable outlook, healthy balance sheet, return ratios and ability to deliver rising dividends make this a reasonable valuation to enter.
Thanks
Thanks for the write up, interesting story. However when we come to end of it, with expectation of 7-8% and dividend yield of 1.5%, is it worth to take exposure to equity?
Hello Sir,
You are right that the growth rate is not exactly exciting. However, we are recommending the stock because of the stable and fairly predictable growth that it will bring along with attractive dividend payouts.
Hope this addresses your question.
Thanks
Thanks Pavithra
Is 1.5 % dividend yield is attractive?
Please check its growth compared to other players in competition….
Somehow the rationale is not convincing .
Hello Sir,
Thanks for sharing your thoughts. In India companies trading at very high dividend yield are value traps. They have poor growth prospects and can see stock price declines. We prefer companies with the ability to deliver rising dividends with moderate profit growth as safer dividend bets. Abbott fits this description.
Thanks.
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