Buy HUL on decline, says PN Vijay

PN Vijay, Portfolio Manager, www.askpnvijay.com advises traders to buy HUL on decline.

Vijay told CNBC-TV18, “HUL, what I heard about volume was not surprising at all because at every opportunity management has been cautioning about the volume. It could be a strategy to do that because if you look at HUL as compared to Unilever Overseas, it is in what you may call the commodity aspects of the business more into detergents etc which are really commodity and not into cosmetics and personal care which is where niches are high margins are there. So, to some extent the desire to keep earnings before interest, taxes, depreciation, and amortization (EBITDA) good with higher pricing power and lower volumes is a good strategy and I am not too worried that the volumes are slightly going down as long as the EBITDA margins are sustained. The 0.5 percent increase in royalty, I am not making too big a thing about it.”
He further added, “When Maruti did that the share fell like anything and in a month it recovered back because there is a lot of technology, there is a lot of brands happening globally, generally in India the consumer is getting more brand conscious, more prepared to pay a bit more. So, lever which has been such a commodity boring player in the Fast-moving consumer goods (FMCG) is now trying to reinvent itself and position itself more closer to the Procter & Gamble range. All this is I think part of a strategy and I would personally say that if the HUL share sold off it was because of high expectations, probably some level of position building and I would continue to buy lever as a blue-chip to balance my portfolio at every decline.”