Hindustan Unilever downgraded to 'Hold' by MarketsMOJO due to current performance and valuation

Hindustan Unilever, one of the largest FMCG companies in India, has recently been downgraded to a 'Hold' by MarketsMOJO on October 8, 2024. This decision was based on the company's current performance and future potential.
Despite having a strong long-term fundamental strength with an average Return on Equity (ROE) of 31.86%, Hindustan Unilever's stock is currently in a Mildly Bullish range. The company has also shown healthy long-term growth with an annual net sales growth rate of 9.36%. Additionally, its low Debt to Equity ratio (avg) of 0 times is a positive sign for investors.

On the technical front, the stock's MACD and KST factors are both Bullish, indicating a positive trend. However, the stock's high institutional holdings at 26.03% suggest that these investors have better capability and resources to analyze the company's fundamentals compared to retail investors.

With a market cap of Rs 6,65,933 crore, Hindustan Unilever is the largest company in the FMCG sector, constituting 31.17% of the entire sector. Its annual sales of Rs 62,107 crore make up 18.08% of the industry.

In terms of valuation, the stock has a Very Expensive valuation with a 12.9 Price to Book Value and a ROE of 20.1. However, it is currently trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 12.72%, but its profits have fallen by -0.2%.

Overall, Hindustan Unilever has underperformed the market in the last year, with a return of 12.72% compared to the market's (BSE 500) return of 35.27%. Based on these factors, MarketsMOJO has downgraded the stock to a 'Hold' and advises investors to carefully monitor its performance in the future.