HUL investors should participate in open offer: Raamdeo Agrawal

Unilever said it would buy upto 487 million shares or 22.5% of HUL's equity at Rs 600 per share

Investors should tender their shares in Hindustan Unilever (HUL)’s in the buy-back offer launched by Anglo-Dutch consumer goods giant Unilever Plc, said Raamdeo Agrawal, Director& Co founder, Motilal Oswal Financial Services.

Unilever said it would buy up to 487 million shares or 22.5% of Hindustan Unilever’s equity at Rs 600 per share, a 20.6% premium to Monday's closing price. The stock, which hit a high of Rs 597 earlier today, was trading at Rs 584.40, up 17.4% at 1:30 PM on Tuesday.

“Already at Rs 500, after results yesterday, the stock was fairly rich. With this 20% kind of premium it becomes quite a good sell,” said Agrawa, who is known to be a value investorl.  He said the stock could correct back to Rs525 after the offer is complete.

“If one wants to make one time profit of Rs 70-80, then of course one should exit,” said Agrawal. “If investors are in taxation brackets of 15-20%, then, post tax, I do not think it will be very well off. Hence, it is better to hold on, if your post tax return from the sell off is not significantly better,” he said.

For investors who have held the stock from 2001 to 2010, when the stock was an underperformer, Agrawal said it is a hold.