HUL hits 52-week high as company forays into health & wellbeing category

The company will be buying a majority stake in Zywie Ventures, promoter of brand OZiva, for Rs 264.28 crore and up to 20 per cent stake in Nutritionalab for Rs 70 crore.

Shares of FMCG major, Hindustan Unilever (HUL) extend the winning run for the fifth straight trading session in Friday's intra-day trade after the company announced its foray into health & wellbeing category. The stock so far hit a fresh 52-week high at Rs 2,741 and was up 0.7 per cent at Rs 2,720 as of 10:55 AM on the BSE. The counter had seen trades of around 14,000 shares.

Meanwhile, the S&P BSE Sensex slipped into the negative zone and was down 0.3 per cent at 62,360.

On Thursday, HUL announced buying a majority stake in Zywie Ventures, which sells plant-based and clean-label consumer wellness brand under the name OZiva, for Rs 264.28 crore. Indirectly, the FMCG major will be acquiring Zywie subsidiary Zenherb Labs. The company plans to complete the first leg of Zywie's acquisition by January 02. 

That apart, HUL will buy up to 19.8 per cent stake in Nutritionalab, which houses its products under the brand name Wellbeing Nutrition, for Rs 70 crore.

The health & wellbeing category is a fast-evolving category in India with a potential market size of Rs 30,000 crore over the next four-five years, Ritesh Tiwari, CFO, HUL, told analysts during a conference call after announcing the deals. READ MORE

The stock has logged gains in the last five straight trading sessions, up 5 per cent, and has witnessed a steady ascent in the last three weeks, up 10 per cent. Analysts attributed the keen interest at the counter to prospects of healthy demand in rural markets owing to normal monsoons, good harvest & increase in MSP.

Brokerage firm Prabhudas Lilladher remains bullish on the FMCG sector given low penetration in several product categories and low FMCG per capita consumption (USD 46) vs other developing countries.

On HUL in particular, the brokerage said in a note, it remains positive on growth given HUL's low penetration of rural with 31 per cent of consumption (69 per cent of population) and its strong reach, rising affluence increasing scope of premiumisation, favorable demographics with larger share of millennials and Gen Z, portfolio straddling price segments to cater to cater to all class of customers, sustained innovation, renovation and new launches and higher growth and market share in channels of future modern Trade & e-commerce.