Mumbai: Shares of Hindustan Unilever Ltd (HUL) on Wednesday rose 2.07% to ₹ 1,845.60 apiece on the BSE, imparting it a market capitalization of over ₹ 4 lakh crore for the first time. HUL is only the fifth Indian company to achieve the milestone; the other four being Tata Consultancy Services Ltd (TCS), Reliance Industries Ltd (RIL), HDFC Bank Ltd and ITC Ltd. The development comes two days after HUL acquired Horlicks maker GSK Consumer Healthcare Ltd in an all-stock transaction valued at ₹ 31,700 crore.
In intraday trade Wednesday, HUL shares touched a record high of ₹ 1,852 on the BSE, up 2.3% from previous close. The scrip closed at an all-time high of Rs1,845.60, up 2.07%. At close, its market cap stood at ₹ 3,99,507.51 crore. The benchmark Sensex closed fell 0.69% to end the day at 35,884.41 points.
TCS is the most-valued company in India with a market cap of ₹ 7.53 lakh crore, followed by RIL with a market cap of ₹ 7.32 lakh crore.
HUL shares have risen more than 18% in the last one month; so far this year, the stock has gained 34.9%.
The HUL-GSK deal struck Monday is seen boosting the FMCG firm’s share price. The share swap ratio in the HUL-GSK deal has been set at 4.39:1, valuing the all-stock merger deal at ₹ 31,700 crore. Unilever’s ownership in HUL will reduce to 61.9% from 67.2% now while GlaxoSmithKline Plc will get 5.7% stake in HUL.
“The (HUL-GSK) deal is accretive from both an EPS (earnings per share) and margin perspective and may lead to 800-1000 basis points synergy on margins in a phased manner once the merger happens in 12 months’ time," said Jefferies India in a 3 December note.
Brokerage Elara Capital said, “Assuming that HUL will be able to 9% value growth in Horlicks (ask rate is 20% growth in Super premium and just 5% in base Horlicks business), and successfully implementing the cost synergies (800-1000 bps at EBITDA level), we estimate the merger to increase overall EPS for FY21 by 6.4%."
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According to Emkay Global’s note on 3 December, “We are currently factoring in only part of the benefits indicated by the management and believe Improvement in growth from higher distribution and innovation capabilities can drive more upsides.
HUL’s big bet on health drinks with GSK acquisition appears positive, and we estimate EPS accretion of ~6% from the deal. Management’s positive commentary on category growth and synergy benefit targets can drive more upsides we believe."
Of the analysts covering the HUL stock, 22 have a “buy" rating, 14 have a “hold" rating, while three have a “sell" rating, shows Bloomberg data.