HUL Price crosses Rs 700 !~Shareholders who Tender exited at Rs 600 were Foolish ~ and now Furious !

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:

Hindustan Unilever crosses Rs 700 ! inside a fortnight of Closing of Share Tender Offer of Rs 600! ~ Shareholders who exited in the tender were foolish but now they must cry Foul ! ~ 18-Jul-2013

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 read more