HUL open offer begins at Rs 600 per share, stock trades flat

AppId is over the quota
AppId is over the quota

At present, Unilever PLC has 52.48 per cent stake in HUL. The proposed open offer is valued at $5.4 billion and post the offer the stake will go up to 75 per cent.

At 11:00 a.m.; HUL was trading 0.4 per cent lower at Rs 590.85. It hit a low of Rs 589.05 and a high of Rs 594.35 in trade today.

Rahul Singh, Head of Research, Standard Chartered Securities in an interview with ET Now said that the valuations seemingly look attractive, but if you compare it with the previous open offers we might get very less or lukewarm kind of tendering in this process.

"Long term, we continue to be positive on Hindustan Lever and anyone with a long term view may or may not choose to tender their shares in this offer if they think the premium is not good enough," he added.

HUL is a market leader in the fast moving consumer goods business in India, with brands spanning categories such as soaps, detergents, shampoos, skin care, toothpastes, deodorants etc.

The stock is up over 20 per cent since April and has remained in a range so far in the month of June.

According to analysts, minority investors can tender their stake in the company at the open offer price. At Rs 600 per share, the stock is valued at around 34xtimes FY15 earnings, making it look expensive in the short term.

The performance of Hindustan Unilever Ltd was a mix bag in Q4FY2013. The volume growth of 6 per cent in the domestic consumer business was ahead of the Street's expectation; however, the same is way below the 10% volume growth clocked by the company in the past.

"We believe the next two quarters will have to be keenly monitored in terms of any improvement in the volume growth," Sharekhan said in a note.

The brokerage firm broadly maintains their earnings estimates for FY2014 and F2015.

We have collated views from different brokerage firm as to what investors should do with the open offer:

CLSA: Open offer price if attractive; Recommend investors to sell the stock

IDFC: Subscribe to open offer; Stock is getting re-rated

Budget 2014: Commex trades not speculative if commodity transaction tax's paid

AppId is over the quota
AppId is over the quota
MUMBAI: Traders and business houses which traded commodities exempt from commodity transaction tax (CTT) on recognised commexes and adjusted losses or gains arising from such transactions against business income or losses will not be allowed to offset such transactions any longer.

This is because the Budget spells out that such offsetting of transactions can be done only in respect of commodities traded on recognised associations (by CBDT) and on which CTT has been paid. This will be applied retrospectively from April 2014. Such transactions have been declared as non-speculative or eligible ones for offsetting.

Earlier, if CBDT recognised a commex that collected CTT, all transactions done on it were deemed non-speculative. But the government has now modified the previous rule, in line with a notification in January this year, that only transactions done on a CBDTrecognised exchange and on which CTT has been paid are not speculative, explained Anil Mishra, MD & CEO, Ahmedabad-based commex NMCE.

However, another commex official on condition of anonymity, said a trader will also continue to be able to adjust business loss/profit against that from non-CTT commodity futures contract so long as these transactions result in delivery.

Section 43(5) of the income tax deems transactions in commodity, including stocks and shares, but excluding derivatives on recognised stock bourses, as speculative if they do not result in delivery.

Speculative loss/gain can be offset only against speculative loss/gain and carried forward for 4 years, while non-speculative gain/loss can be offset against speculative loss/gain and business loss/gain and carried forward for 8 years.

CTT was announced by the UPA government in the Budget for FY14 and began to be imposed from July last year.

HUL open offer begins at Rs 600 per share, stock trades flat

AppId is over the quota
AppId is over the quota

At present, Unilever PLC has 52.48 per cent stake in HUL. The proposed open offer is valued at $5.4 billion and post the offer the stake will go up to 75 per cent.

At 11:00 a.m.; HUL was trading 0.4 per cent lower at Rs 590.85. It hit a low of Rs 589.05 and a high of Rs 594.35 in trade today.

Rahul Singh, Head of Research, Standard Chartered Securities in an interview with ET Now said that the valuations seemingly look attractive, but if you compare it with the previous open offers we might get very less or lukewarm kind of tendering in this process.

"Long term, we continue to be positive on Hindustan Lever and anyone with a long term view may or may not choose to tender their shares in this offer if they think the premium is not good enough," he added.

HUL is a market leader in the fast moving consumer goods business in India, with brands spanning categories such as soaps, detergents, shampoos, skin care, toothpastes, deodorants etc.

The stock is up over 20 per cent since April and has remained in a range so far in the month of June.

According to analysts, minority investors can tender their stake in the company at the open offer price. At Rs 600 per share, the stock is valued at around 34xtimes FY15 earnings, making it look expensive in the short term.

The performance of Hindustan Unilever Ltd was a mix bag in Q4FY2013. The volume growth of 6 per cent in the domestic consumer business was ahead of the Street's expectation; however, the same is way below the 10% volume growth clocked by the company in the past.

"We believe the next two quarters will have to be keenly monitored in terms of any improvement in the volume growth," Sharekhan said in a note.

The brokerage firm broadly maintains their earnings estimates for FY2014 and F2015.

We have collated views from different brokerage firm as to what investors should do with the open offer:

CLSA: Open offer price if attractive; Recommend investors to sell the stock

IDFC: Subscribe to open offer; Stock is getting re-rated