Is Marico a Contrarian Buy?

As Marico is quite illiquid, I don’t think Technical Analysis will apply to it. Rather it needs to be based on Fundamentals.

It is one of the best fundamental shares in Dhaka Stock Exchange. It is the market leader in Hair Oil. With the general population moving from “loose” hair oil to branded hair oil, I think the prospects of growth are good. Moreover, it has huge Cash Reserves. Summary given below:

Profit	2012	2013	2014	2015	Till Q2 '16
Annual	870	1,390	1,345	1,414	875
EPS	27.53	44.00	42.70	44.90	27.78
Dividend	150% C	900% C	425% C	450% C	450% C
NOCFPS			13.0	68.0

With its dividend yield of ~4% (based on Tk 45 already paid and today’s closing price of 1065; actual yield would be much higher considering future dividends to be distributed), I think it would be good for most long-term investors, especially those who want to have it during retirement (for Cash Dividends).

Area of concern: One area of risk is that the top line revenue has declined in last two quarters. Is the market expecting a poor q3?

Price Action on 22 Dec 2016: Today’s fall is astonishing. Considering the bullish market, Marico who had stellar half yearly earnings and dividends, its fall on high volume is unexpected!

Either it is the start of a break-down (probability low) or it is a selling climax (interpreting from today’s volume).

I would suggest that interested buyers watch next few days candle to decide. A reversal candle would be welcome but not necessary.

With PE around 19 and RSI ~ 12, I think reversal is imminent.

There are three support zones below – 1040, 1000 and 932 (worst case scenario). 

If the index had been around 4200 level, I would not have hesitated to buy – but considering the other alternatives available, it leaves this Technician in a dilemma! The graph below is quite scary!