Clearly, market observers say there could have been speculation in the stock, largely on roumours that its parent company Unilever PLC may make another offer for hiking stake in the company, after its recent offer fell short of the targeted stake hike in the company.
Others say that the floating stock is low and most of the remaining investors have been long term shareholders of the company unwilling to sell their shares. Whatever the reason, the shares of Hindustan Unilever are over priced and deserve to be sold into.
"Cut the noise and focus on fundamentals; challenging business environment restricting revenue growth to 12% yoy and net profit growth to 8% yoy in FY13-15E period," Emkay Global has said in its research report.
It also says that Hindustan Unilever has expensive valuations at 40X FY15E earnings; higher than Asian Paints, Colgate and Nestle which have much stronger category dynamics.
Most other brokerages had asked investors to tender their HUL stock in the open offer, as they found the valuation high at Rs 600. At a price to book of 43 times and a low dividend yield of 1% the stock does look expensive.