This Nifty 50 Stock Slips to 52-Week Low; Time to Buy?
HLL
-1.43%
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1. Hindustan Unilever (NS:HLL) Limited, with a market cap of INR 5,40,394 crore, hits a 52-week low amid market corrections, drawing investor interest.
2. Despite its underperformance, InvestingPro rates it 3 out of 5 for financial health, but valuation concerns remain, especially in EBIT, EBITDA, revenue, and book value metrics.
3. can be availed at a steep discount which can help you take your investment journey to a new level at a much lower cost.
As the broader market is taking correction, with the Nifty 50 index falling by 210 points to 21,843, by 2:41 PM IST, many stocks are looking weak. But one counter that has now started to catch investors’ attention is Hindustan Unilever (LON:ULVR) Limited.
It is a fast-moving consumer goods (FMCG) company, that manufactures and sells food, home care, personal care, and refreshment products in India and internationally and has a market capitalization of INR 5,40,394 crore.
The stock has been a poor performer in the last few years and has significantly underperformed the benchmark index. In fact, it is up by only 44% in the last 5 years. Today, the stock fell to a new 52-week low of INR 2,246.85 and the momentum is not looking to fade anytime soon. So the question is, should you go long on this counter at these beaten-down levels?
Well, InvestingPro’s financial health score of 3 out of 5 isn’t bad and qualifies it as a portfolio stock. However, there are still some valuation concerns despite this fall. ProTips flags warnings regarding valuations on the EBIT, EBITDA, revenue, and book value front. If you see the “Relative Value” parameter of financial health, it’s been given a rating of 1 out of 5.
Image Source: InvestingPro
To further gauge the true value of the stock, you can refer to the fair value. In this case, 14 financial models were taken into consideration to calculate different intrinsic values and the average of all of them (fair value) is coming at INR 2,275 which is almost the CMP. So the valuation gap is not there to make a high probable bet.
As the RSI (daily, 14) is showing an oversold reading of 27.2, the stock can definitely bounce back. However, a meaningful rally might be too much to expect especially when the broader markets are correcting.
For long-term investors, they can further wait for a dip so that the valuation gap increases, resulting in a better probability of a good exit.
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