Mumbai, Jun 26 (IANS): In a clear case of one hand not knowing what the other is doing, the mutual fund arm of country's largest bank SBI has remained heavily invested in the potentially "risky" stocks of Emami Ltd despite another bank subsidiary, SBI Caps, dissuading long-term investors from investing in the company having highly unfavourable risk reward ratio.

SBI Mutual Fund, through its SBI Consumption Opportunity fund, holds 5.13 per cent in Emami Ltd that has seen big erosion in value with shares seeing a 50 per cent correction in price in last one year. In fact, Emami's stock price hit an over four-and-half year low of Rs 270 on Monday, slipping 7 per cent on the BSE, after huge block deals.

In a recent report on Emami, SBI Caps said that "risk-reward" for Emami is "still unfavourable" for the long-term investor but clearly another sister concern, SBI MF maintained contradictory position by not only remaining invested in the stock but also building up the portfolio earlier this year.

"After 50 per cent correction in the stock price in last 1 year, for the short-term investor, we expect a favourable risk reward with a decent return," the SBI Caps report said about Emami.

But for the long term investors the report said that "we think the risk-reward is still unfavourable, as pressure in the core business will remain and non-resolution of the mess despite the expected steps remains a big risk".

SBI Caps, maintained a 'hold' rating on the stock but had reduced its June 20 target price to Rs 300.

Emami on Wednesday closed 9.34 per cent, or Rs 27.15 higher, at Rs 317.95 per share. But the stock has seen a beating for past few sessions. Emami's stock has been under pressure due to company's weak operating performance and rising indebtedness with increased promoter share pledge. The share's one year return has under-performed the Sensex by ( -) 48.68 per cent.