HUL Gains As Soc Gen Buys 1.2 Crore Shares, Brokerages Remain Bearish

Shares of Hindustan Unilever Limited (HUL) gained over 3 percent on Friday after foreign portfolio investor Societe General picked up 1.29 crore shares of the 5.69 percent stake off-loaded by GSK on Thursday.

British drugmaker GlaxoSmithKline Pte (GSK) and Horlicks sold their 5.69 percent equity in HUL on Thursday via a bulk deal to domestic and foreign investors causing the stock to crash in intraday trade.

Hindu Business Line reported that Societe General was one of the buyers and Morgan Stanley, HSBC, JPMorgan were the advisors to the deal.

Brokerages remain positive on the stock after the stake sale.

Earlier this year, HUL completed the merger of GSK Consumer Healthcare with itself and acquired Horlicks brand for India from GSK for Rs 3,045 crore. New shares were issued to the companies as part of the merger.

Global research firm Credit Suisse maintained its outperform call on the stock with target of Rs 2,400 per share. The call was based on the view that GSK's 5.7 percent stake sale removes the key overhang. It also said that premium of its peers Britannia Industries and Dabur India has narrowed to 5-15 percent after the recent correction.

"GSK Group selling HUL shares will reduce the supply overhang in the stock and any correction in the stock price should be considered as an opportunity to invest in a cash-rich company from a long-term perspective," said Sharekhan as quoted by Economic Times.

"Post normalisation of the business environment, HUL will see faster recovery in its financial performance on account of its leadership positioning in key categories, strong distribution reach, and the fact that 50-55 per cent of domestic portfolio is catering to essential categories," it added.

IIFL Securities said that funds generally bearish on the markets will look at parking cash in HUL in the current environment.