Prime Stock Recommendation: An MNC pharma play for passive income

1. 

   draltaf

   January 20, 2025 at 9:05 pm

   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.
   1. 

      Pavithra Jaivant

      January 21, 2025 at 10:41 am

      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
2. 

   connectjuby

   January 19, 2025 at 10:14 pm

   with 9% growth, does it not expensive to give 40+ pe ?
   1. 

      Pavithra Jaivant

      January 20, 2025 at 10:16 am

      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
3. 

   kishore.marodia

   January 18, 2025 at 2:55 pm

   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?
   1. 

      Pavithra Jaivant

      January 19, 2025 at 12:13 pm

      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
      1. 

         kishore.marodia

         January 19, 2025 at 3:32 pm

         Thanks Pavithra
      2. 

         mandarjborkar

         January 19, 2025 at 10:36 pm

         Is 1.5 % dividend yield is attractive?
         Please check its growth compared to other players in competition….
         Somehow the rationale is not convincing .
         1. 

            Pavithra Jaivant

            January 20, 2025 at 11:23 am

            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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