Sell HUL around Rs 600-625 advises Agarwal

Rajesh Agarwal, Head of Research at Eastern Financiers advised existing investors to sell Hindustan Unilever (HUL) around Rs 600-625. However, new investor should wait for the price to come around Rs 500-510, he added.

Agarwal told CNBC-TV18, “Although the numbers of HUL were slightly better-than- expectation but if one looks at the details it was because of the softening of raw material prices and the increase in maximum retail price (MRP) of the products. Overhang of royalty and increase of advertisement expenses is still there. Valuation at 35-36 times does not leave anything on the table for the investor as such.” He further added, “Even if one goes by the open offer at Rs 600 the ratio would be around 47 percent. That means if one tenders 100 shares in open offer only 47 will be accepted, 53 will come back and we expect the price to stabilize around Rs 510- Rs 520 post open offer. So that leaves the investor with almost nothing, rather he will suffer a loss if he invest in this point. Just wait for the price to come around Rs 500-Rs 510 after the open offer, since the investor is willing to stay in the stock for 5 to 6 years, should wait after the open offer to invest.” “For existing investors I would suggest sell around Rs 600- Rs 625 in the current market because if one tenders in the open offer you entail a capital gain tax and then one is left with 53 shares, almost 53 shares which would be stabilizing around Rs 510-Rs 520. It is better to sell in the market around Rs 625 and for new investment one should wait,” Agarwal added.