See sideways correction in valuations of HUL: Singh

Rahul Singh, Head of Equity Research of Standard Chartered Securities told CNBC-TV18, “On consumer durables, we have been underweight and the issue has been valuations. Of course, event like Unilever’s open offer has pulled up the valuations band again upwards for most of the companies. That has been an unexpected event.”

He further said, “If one looks at the staples, there is a slow down but there is no significant slow down. In terms of discretionary we have seen starting with autos and to some extent in other discretionary segment there has been some slow down. We will probably see a sideways correction or time correction for a long period of time maybe including Hindustan Unilever, which is what I think the current valuations could mean going forward.”

“Given that the triggers for a re-rating further up from here seems to be a little bit few because of the way the consumption is slowing down gradually although not a steep cliff kind of a fall. We are probably not seeing earnings growth similar to what we saw in the last two to three years,” Singh added.