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Hind Unilever to buy back shares at Rs 280

14 Jun 2010 Evaluate

The Hindustan Unilever board on Friday approved a share buyback at a price of up to Rs 280 a share. This will translate into an outgo of Rs 630 crore through open market purchases. HUL scrip closed at Rs 252.5 on BSE, a discount of 11 per cent to the buyback price. The buyback will increase Unilever's stake in the Indian company from the present 52.02 per cent.

 

The buyback is within the stipulation of the Securities and Exchange Board of India that such a move cannot exceed 25 per cent of a company's net worth. This is HUL's second buyback in less than three years. In July 2007, it bought 30.2 million shares for Rs 626.27 crore at an average price of Rs 207.13. At that time, the cap was Rs 230 a share.

 

In the last quarter, the net profit rose 47 per cent to Rs 581.20 crore from Rs 394.99 crore in the corresponding quarter a year ago. Total sales were up 8.20 per cent at Rs 4,315.75 crore (Rs 3,988.3 crore). However, the improvement in topline continues to come with higher spends on advertising and sale promotion which accounted for 14.5 per cent (Rs 626 crore) of its sales in the March 2010 quarter.

 

The company is now keen on getting into the rural market. Increasingly, manufacturers are beginning to realise the potential of these regions, especially after the 2009 slowdown when urban India was not buying as aggressively as its rural counterpart.

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Hindustan Unilever Share Price

2238.40 -2.70 (-0.12%)
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