While the stock has turned a darling of the investors since last three years, in the last two trading sessions alone, it yielded 25% of gains even as its March quarter earnings beat expectations on Monday. On the BSE, shares of HUL rallied close to its open offer price and touched an intra-day high of R597, before ending the session at R583.60, up 17.3%. At the back of this gain, the year-to-date return of the FMCG giant stands at 11.2% against a 0.4% rise in the Sensex during the period.
The open offer for acquiring 48.74 crore shares of HUL at R600 per shares is aimed at raising the multinational parents stake by 22.52% to 75% and highlights the importance of emerging markets in Unilevers corporate strategy amid a slowdown in developed economies. Market observers believe that the open offer may be the companys approach to counter the negative sentiment it generated in January 2013 by deciding to double the royalty payment in the next five years. While some expected the offer to generate positive response, given the stocks performance in the last three years and investors reaction to the open offer news on Tuesday, traders expect secondary market pressure for the company to consider revising the offer price upwards.
After a decade of dull performance, the stock drew investor interest in the last three years and also emerged as the top bluechip performer in 2012 with a year-to-date gain of 30% though the market tanked by 25%. Analysts have attributed the turnaround to the companys innovation and expansion of premium brands across categories like soaps, detergents, personal products and processed food, besides its strong distribution channel.
Between 2010 and 2012, the average return on HUL has outdone that of the Sensex by nearly 20%. On a long-term basis as well, the HUL stock has outdone Sensex by providing 17.6% CAGR since 1991. The Sensex has generated 11% CAGR returns in the period. HUL, which has always been considered a strong defensive player in an ever-growing consumer market of India, was also popular among investors due to its healthy dividend payout policy. In the last 15 years, the company has maintained an average dividend payout ratio of close to 80%.