Hindustan Unilever share price is at risk as foreign holders flee

By:
on Apr 24, 2024
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  • Hindustan Unilever’s stock price has dropped sharply this year.
  • Many foreign funds have sold the company as its growth slows.
  • It is facing substantial competition from smaller cheaper brands.

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The Hindustan Unilever share price continued its bearish trend in the past few months as foreign investors dumped the stock. The stock crashed to a low of ₹2,170 this month, its lowest level since June 2022. It has plunged by over 18% from the highest point in March last year.

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Foreign investors are exiting the stock

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The Hindustan Unilever stock price has come under pressure as concerns about its slow growth continues. This trend has also escalated as foreign investors have exited their stake in the consumer staples company.

Data compiled by Bloomberg shows that foreign investors have slashed the company’s holdings to just 12.7%. The figure stood at almost 15% at the start of the year and the trend may continue in the foreseeable future. Unilever owns about 60% of the company.

The stock has retreated even as other Indian stocks have bounced back, with the Nifty 50 and BSE Sensex indices sitting at their highest levels on record. Indeed, it has become the second worst-performing company in the Nifty 50 index.

The most recent financial results showed that Hindustan Unilever was not growing as fast enough as it faces substantial competition in India. Revenue for the fourth quarter stood at ₹1.545 billion, down from ₹1.545 billion in the same period in 2022, meaning that it is not growing as fast.

unilever growth

Hindustan Unilever’s growth has stalled

Hindustan Unilever blamed its financial results to three key factors: weather issues, subdued festive season, and an uneven recovery in the country. While India’s urban centers are doing well, the company noted that the rural areas were subdued, which affected demand.

The company, which sells brands like Axe, Dove, Close Up, and Horlicks, is also facing substantial competition from big brands like P&G and Colgate Palmolive. Most importantly, it is facing competition from smaller newer brands that are undercutting its margins. 

It is also worth noting that other Unilever stocks are not doing well. In the US, the stock has plunged to about $48, lower than last year’s high of $54. Similarly, in London, it has retreated to 3,860p, down from the 2023 high of 4,330p.

Hindustan Unilever share price forecast

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hindustan unilever

Unilever chart by TradingView

Turning to the weekly chart, we see that the Hindustan Unilever stock price found a strong resistance point at INR 2,696 in 2022 and 2023. It has struggled moving above this level several times since then.

Now, the stock has moved below the neckline of this triple-top pattern at INR 2,356, its lowest level in March last year. Most notably, it has collapsed below the 50-week and 200-week moving averages and formed a bearish flag pattern.

Therefore, the outlook for the Hindustan Unilever’s share price is bearish, with the next point to watch being at INR 2,000. This view will become invalid if the price rises above the key resistance point at INR 2,355. 

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