Buy-back offer lifts HUL stock by over 6%

Written by Markets Bureau | Mumbai, Jul 30 | Updated: Jul 31 2007, 05:08am hrs
The stock price of Hindustan Unilever Ltd (HUL) surged by 6.26% or Rs 12.30 to close at Rs 208.75 on the BSE on Monday following the announcement that the company would buy back 2.7 crore equity share of public shareholders from the open market at a maximum price of Rs 230 per equity share and up to an aggregate amount of Rs 630 crore.

The buy-back price is at a 17% premium to the shares closing price of Rs 196.45 on Friday. The stock opened the day at Rs 200 and hit an intra-day high of Rs 211.70 before ending the day at Rs 208.75. It was the biggest gainer among the Sensex pack with 14.48 lakh shares changing hands generating a turnover of Rs 30.19 crore.

The buy-back of equity shares is proposed to effectively utilise the surplus cash and make the balance sheet leaner and more efficient to improve returns. HUL has registered a 29.56% growth in net profit to Rs 493.08 crore in the quarter ended June 2007 from Rs 380.59 crore in the quarter ended June 2006.

According to dealers the spurt in HUL stock price on Monday was mainly on account of excellent first quarter results posted by the company and the buy back announcement acted as a catalyst.

The company has one long year to complete the buy back process and the price at which it will buy back the shares indicates that HUL stock is not expected to fall below that level during the commencement of the period.