Kesh King acquisition quite expensive; do not add fresh positions in Emami: Ambareesh Baliga

In a chat with ET Now, market expert Ambareesh Baliga talks about whether the acquisition of Kesh King would weigh on Emami stock.

ET Now: Emami has made an expensive acquisition. Paying 5 times annual sales for a hair oil brand is not cheap. They do believe that they could recover the money in the couple of year’s time. They are not taking extensive debt for this. That said, their earlier strategies have worked out really well. How about this one? What is the call on investing in the stock?

Ambareesh Baliga: It not necessary that every time the strategy will work out well. I think that it is quite an expensive acquisition, especially looking at the current consumer demand which is weak for most FMCG companies.

From that point of view, I think one should be a bit careful at this point of time as far as the Emami is concerned. The acquisition could be a drag on their balance sheet at least for a while. So at these levels, I will not really buy fresh.