Hindustan Unilever (HUL) has entered into an agreement with HDFC for the sale of its previous headquarters Lever House in Churchgate, South Mumbai. According to media sources, the deal has been inked at Rs 3 billion. The property (1.53 lakh square feet) had previously been leased out to the buyer (HDFC) for a three year period from 2012. HUL has had a slew of property sales in the past few years selling property worth Rs 10 billion since 2012.
Commenting on the same, ICICIdirect said, "Considering that the current deal has been done at Rs 3 billion, we believe the proceeds would add to the company’s earnings per share by Rs 1 in FY15E, increasing it to Rs 20.3.
With no major changes in business revenues and earnings for FY16E and FY17E, we maintain our future estimates and a Hold rating on the stock.
We expect near terms concerns over demand revival to remain an overhang on the stock. However, with a revival in urban demand and strong brands in growing aspirational segments, we believe HUL is strongly placed to capture the booming consumer demand in the next three to five years. We value the stock at 32x FY17E EPS of Rs 23.9 and arrive at a target price of Rs 755/share."
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