Demand recovery hopes, valuations to support Hindustan Unilever stock

The FMCG sector is hoping for demand recovery with hopes of a better monsoon helping rural demand and expectations of a pro-consumption Budget

FMCG major Hindustan Unilever’s (HUL’s) move to sell its water purification business, Pureit, to AO Smith India for Rs 601 crore was well received by the market. The HUL stock ended the day with gains of 2.7 per cent.

Analysts say the water purification business is very competitive and product differentiation is difficult and it has low margins.

The turnover in FY24 was around Rs 293 crore, which is just about 1 per cent of HUL’s revenues and the sale values it at around 2 times the turnover.

The divestment allows HUL to focus on core categories