HUL down for 3rd straight day on parent company warning

Stocks

oi-Sunil

By Sunil Fernandes

Updated: Friday, October 4, 2013, 11:43 [IST]

Shares in India's largest Fast Moving Consumer Goods Company, Hindustan Unilever dropped for the third straight day after the parent company, Unilever PLC sounded a warning on slowing growth in emerging markets.

Shares in Hindustan Unilever were down 0.8 per cent and were last trading at Rs 604 on the National Stock Exchange. The shares have fallen dramatically after hitting a 52-week high of Rs 725 earlier in July.

Investors remain worried that volume growth at the company may be poor as inflation hits consumer spending. The volume growth in the last quarter was rather disappointing.

Also, input costs have risen for the company in the last few weeks due to a sharp depreciation in the rupee.

The company recently hiked the prices for some of its products, but a hike in some key products may see volume growth being affected further.

There is also a possibility that consumers may shift to cheaper products.

The shares of Hindustan Unilever have been one of the top performing stocks and has rallied substantially in the last few months as investors have found defensives a safe place to hide.

This has resulted in the valuations of stocks like Hindustan Unilever becoming extremely expensive. If the company does not show a decent performance, the shares could fall owing to the fact that the shares are expensive at the current levels.

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