HUL Price crosses Rs 700 !~Shareholders who Tender exited at Rs 600 were Foolish ~ and now Furious ! and they have a full right to cry Foul here !
HUL is dealing with a Hot Potato here !
Early in May 2013 I had warned on my company website’s Scrip Standpoint Module that Shareholders should not participate in the Unilever Open Tender Offer giving a detailed reasoning for this advice
Unilever to try increasing Stake in HUL to 75% ~ Why? and should Shareholders support the Open Offer at Rs 600?~ 08-May-2013
Now inside a fortnight and in the same month of July 2013 that the Open Tender Offer at Rs 600 by Unilever closed having attracted @ 32 cr shares and allowing Unilever to raise it’s Equity Stake in HUL from 52.48% to 62.26%,the Share Price of HUL has crossed Rs 700 this morning !
This morning have posted this on my company website:
This would mean that the foolish shareholders who fully or partially exited HUL in the tender by offering @ 32 cr shares now have notionally lost an incremental Rs 3200 crs !
They have a right to be furious as the HUL Price has risen because HUL has raised the price of some of it’s products by upto 15% inside 15 days after Share Tender Offer closing !
HUL Management could not have planned this price rise overnight and coming inside a fortnight of the Share Tender closing earlier in the month is clearly suspect ! Why could they have not announced this rise in May or June 2013 before the Share Tender !? ~ The answer is obvious ! ~ They would not have got the response they did in the Unilever Open Offer with @ 32 cr shares being tendered at Rs 600 or they may have had to increase the Offer Price !
Shareholders that exited in the Tender at Rs 600 probably because many ‘top’ advisors advised them to have every reason to feel furious and fouled !
The effect on Profits is stunning.These healthcare products are nearly 30% of the Sales.FY Sales were Rs @ 26000 crs and thus a 10% to 15% rise in the product prices would increase profitability by a @ Rs 1000 crs giving an incremental effect of Rs 5 on the EPS and at a PE Multiple of 30 that translates into a Share Price rise of Rs 150 !
FY 13 bottomline was Rs 3800 crs .This year it should cross Rs 5000 crs
Read more thoughts and implications about this in the link provided above to my company website