Shares of FMCG major Hindustan Unilever jumped 1.31% to hit a new one-year high in Friday's trading session after the company announced the acquisition of a majority stake in OZiva and a 19.8% stake in Wellbeing Nutrition.
The stock began the day strongly at ₹2,724.70 apiece, and it continued the same momentum to hit a 52-week high of ₹2,741.60 in early trade against the previous close of ₹2,705.45. At 2:30 p.m., the stock was trading at around ₹2,730.40, up by 0.92% on the NSE.
In a regulatory filing on Thursday, HUL said it had picked up 51% in Zywie for ₹264.28 crore in the first tranche. The balance 49% stake will be acquired after three years from the completion of the first tranche on pre-agreed valuation criteria, Mint reported.
The company has also bought a 19.8% stake in Nutritionalab for ₹70 crore, which makes oral thin strips, slow-release capsules, and marine collagen powder. The stake was bought through a mix of primary infusion and secondary buyouts for ₹70 crore in cash. Nutritionalab posted revenue of ₹19.40 crore in FY22. The company is led by Avnish Chhabria, the report said.
The move is in line with HUL’s "strategic priority" of entering fast-growing demand spaces. Holistic health and wellness are emerging as "mega consumer trends" in India, Ritesh Tiwari, chief financial officer, HUL, said in an analyst call.
After hitting a 52-week low of ₹1,901.6 apiece in March 2022, shares of HUL have grown consistently to their current level of ₹2722.85, representing a return of nearly 43.20 percent. At current levels, the stock is just 4.52% away from its all time high of ₹2,859.30 reached on September 2021.
In addition to that, the stock also ranks among the top gainers in the Nifty FMCG index, with a return of 16.5 percent in the past one year.
On the fundamental side, the company has zero debt, Trendlyne data showed. The company had a ROE and RoCE of 18.08% and 20.19% at the end of March 2022.
Meanwhile, analysts are bullish on the stock following the company's business updates on Capital Markets Day 2022 for institutional investors and financial analysts on November 18, 2022.
Brokerage firm, Phillip Capital maintained a "buy" call on the stock with a target price of ₹3,200 per share. The brokerage continues to maintain its positive stance given management's focus on driving business growth via consistency in strategy and best-in-class execution capabilities.
Similarly, Motilal Oswal Financial Services maintained a "buy" call on the stock with a target price of ₹2,900 apiece, citing that the company continues to place the building blocks for future growth and has been able to do so ahead of peers.
On the other hand, Elara Securities upgraded the stock to a "buy" from an "accumulate," but it kept the target price unchanged at ₹3,060. The brokerage stated that while rural demand remains a cause for concern in the near term due to high inflation, HUL has retained its target of achieving double-digit EPS growth in the next decade, led by modest margin improvement, which is encouraging.
For the September quarter, the company reported a 22.19% rise in its consolidated net profit of ₹2,670 crore compared to a net profit of ₹2,185 crore in the corresponding quarter of the last fiscal.
The revenue from operations increased to ₹15,253 crore during the quarter from ₹13,099 crore, a growth of 16.44% YoY. The volume growth in Q2 FY23 came in at 4%.
The company's expenses increased on the back of high raw material costs. The company's total expenses in the July-September quarter stood at ₹11,965 crore as against ₹10,129 crore in the year-ago quarter.
An average of 39 analysts polled by MintGenie have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.