03 March, 2021

Levers To Rescue Goliath

Once ranked as a profitable blue-chip company, its core business has been blown away by competing brands

Levers To Rescue Goliath
Chandrakant Sampath purchased his first lot of Hindustan Lever in the late 1970s. His portfolio multiplied several times due to a string of bonus issues announced by a company that was perceived as the "bluest of the blue chips". There was no way an investor could lose money on the stock given the steady rise in market price, high dividends and additional bonus shares that one got for free. Nearly three years ago, he exited from the stock and never touched it again. He was lucky, for the scrip touched a seven-year low last month.

His "sell" philosophy: a belief in the basic law of nature that when things become heavy, it's difficult to lift them further. When applied to stockmarket, it meant that when firms become too big, their toplines can never grow fast. So was the case with HLL that had become a

Rs 10,000-crore company by 1999. But he insists that despite reaching a low last month HLL is "a fine stock but it doesn't suit my taste since I'm looking for better returns by taking higher risks". He adds that almost every company reaches a seven-year low and probably...

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