Mumbai: France-based multinational investment Bank Societe Generale bought 96.95 per cent (around 13 crore shares) of Hindustan Unilever Ltd (HUL) on Friday when UK-based Glaxo-SmithKline (GSK) offloaded its entire 5.7 per cent of its stake in HUL (around 13.38 crore shares) via block deals.
As a result, compared to its previous close of Rs 1,992.05, the HUL stock opened at Rs 2,074.95 and moved further up at day’s high of Rs 2,098. It touched day’s low at Rs 2,036 and closed at Rs 2,077.85, up by Rs 85.80 (gained 4.31 per cent). Around 1.61 crore shares changed hands.
The NSE bulk deal data on the exchange showed foreign portfolio investor Societe Generale, a French multinational investment bank and financial services company, bought 129 million shares of HUL at an average price of Rs 1,902. The rest of the buyers are unknown yet.
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According to the term sheet, an over 133 million shares — 5.7 per cent of the total equity shares — were offered in the range of Rs 1,850-1,950 to investors through a special block window. The deal will be valued roughly between Rs 24,600 crore to Rs 25,900 crore.
As per the scheme of amalgamation among GSK Consumer Healthcare and HUL, GlaxoSmithKline Pte and Horlicks had received 54.08 million shares of HUL (representing 2.3 per cent of total paid-up equity) and 79.69 million shares (3.39 per cent stake), respectively in April. The merger of GSK Consumer with HUL had taken place on the basis of an exchange ratio of 4.39 HUL shares for each GSK Consumer share.
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Accordingly, parent company Unilever Plc and group companies' stake in HUL reduced to 61.90 per cent, from 67.19 per cent earlier after the issue of new shares.
Although, the near term performance could be under pressure as HUL is not immune to the slowdown given impact on discretionary spends and possibility of down-trading in current conditions as consumers up stock products that are available across the shelf, said Axis Securities. .
In a Research note to its clients, Axis Securities said, “From a medium term perspective we believe, HUL has the right growth matrix and multiple levers like 1) broad based portfolio straddling across price-value matrix, 2) focus on cost savings, RM tailwind to aid margin expansion, 3) GSK-Consumer Healthcare integration and 4) superior execution capabilities vspeers to help HUL emerge stronger from the challenging macros.
Axis Securities has maintained a HOLD recommendation and continue to value the stock at 53x FY22E EPS with a revised Target Price of Rs. 2,171/share (earlier Rs. 2324/share).
For the quarter ended March 2020, HUL last week reported a 7 per cent decline in volumes, faring even worse than the demonetisation quarter (October-December 2016), when the fall was 4 per cent. Sanjiv Mehta, chairman and managing director, HUL, said production had come to a near standstill in the first phase of the lockdown and the supply chain disruption was acute, contributing to the decline.
Profit before tax fell 10.6 per cent to Rs 1,992 crore for the period, while net profit declined 1.2 per cent year-on-year (YoY) to Rs 1,519 crore in Q4, as against a consensus estimate of Rs 1,821 crore.
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