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Unilever may up HUL stake

BS Reporter  |  Mumbai 

Unilever is planning to increase its stake in (HUL), its Indian subsidiary, through a proposed buy-back of shares.
 
The board of HUL, India's largest consumer goods company, will meet on July 29 to consider the proposal.
 
At present, Unilever and its group own a 51.42 per cent stake in the Indian operations. Except for India and Indonesia, the company owns 100 per cent in all Asian countries where it operates.
 
Analysts said the proposed buyback will reward shareholders and give them an attractive exit option, as the share price of HUL has been stagnating at around Rs 190 in recent times. 
 
BUY-BACK BRIGADE
Company Start 
date
End 
date
Buyback 
price 

(Rs)
Current  
market 
price
GTL Limited NA NA 300 231.7
ICI India Ltd 29 Sep '06 13 Sep '07 575 502.4
Natco Pharma Ltd 12 Feb '07 30 Jul '07 150 125.3
MRO-TEK Ltd 4 Jun '07 28 Mar '08 55 46.2
Gujarat Ambuja Exports 16 Apr '07 15 Jan '08 38 33.5
 
In the last three years, the stock price of the company has been underperforming the Sensex. Since January 2005, the stock has grown 30.06 per cent, compared with Sensex's 131.29 per cent rise.
 
"The company is also sitting on a huge cash reserve with no major capital expenditure plans in the near future," said an analyst.
 
According to the 2006 annual report, HUL has cash reserves and surplus in excess of Rs 2,500 crore.
 
Analysts added that Unilever has a lot to gain by investing in a high growth subsidiary.
 
"It is logical to consolidate in an emerging economy subsidiary as these are high growth markets that reflect well in the parent's global performance," said an analyst.
 
In recent times, a whole set of MNCs including Blue Dart, Motor Industries Company Ltd (MICO), i-Flex Solutions, Monsanto India, Alfa Laval, Avaya Global, 3M and Timken India is waiting to exit from Indian stock markets as their overseas parents use a stipulation of minimum public shareholding of 25 per cent to exit from the bourses.

 

First Published: Sat, July 21 2007. 00:00 IST
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