Increase in soap demand makes Hindustan Unilever the best stock

Bloomberg | Updated on March 27, 2020

Rising demand for personal hygiene products has brightened the prospects for India’s largest consumer company.

Hindustan Unilever Ltd. has emerged as the best performer on the benchmark NSE Nifty 50 Index, with a gain of more than 14 per cent this year, as bottles of hand-wash, detergents and floor cleaner fly off the shelves amid the coronavirus pandemic.

Of the 43 analysts covering the stock, 30 have a buy recommendation while 12 have given a hold call.

“Though the personal wash category is fully penetrated, it is expected to witness an unprecedented increase in per capita consumption with increasing awareness of personal hygiene,” Sanjay Manyal and Kapil Jagasia, analysts with ICICI Securities Ltd., wrote in a note.

Cities around the world are seeing people rush to load up on products, ranging from canned tuna to toilet paper, as governments impose strict lockdowns to stop the spread of the disease that has infected more than 500,000 people globally and left 23,700 dead.

Earlier this week, Hindustan Unilever announced its plan to buy VWash, an intimate womens’ hygiene brand from Glenmark Pharmaceuticals Ltd. for an undisclosed amount. The deal will be completed over the next few months.

It’s a sign that the company is still functioning “as normal as these present circumstances would allow,” analysts led by Richard Liu, at Mumbai-based JM Financial Institutional Securities Ltd., said in a note.

Published on March 27, 2020

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