3 mn read

Hindustan Unilever Ltd

Sell: Sustainable but not persistent.

  • Volatile condition of the Indian market and the unstable and fluctuated situation of the Indian rupee
  • GST- driven policies
  • Profitable outcomes but the slow pace of volume growth

Several of factors are contributing to the weak state of the Indian rupee, and in the coming months it is anticipated that the volatile condition of rupee will persist. Because of this volatility rupee has become receptive to foreign portfolio flows in the last few years and in turn, this phenomenon affects its debt and equity dimensions. It is also expected that in the first half of the financial year 2018 Indian rupee will continue to stay back from the foreign portfolio flow’s standpoint. Evidently, any stakeholder that holds foreign stocks is unsurprisingly vulnerable to the fluctuations of the exchange rate. And the decisions regarding the performance of the portfolio as well as hedging the foreign exchange risks depend on the interconnectivity and correlation of currency returns and equity. Along with fluctuating situation of the Indian rupee, the Indian market too affirms volatile market conditions that somehow impede the pace of volume growth and, in turn, impact the investors’ decisions reading buying, selling, or holding on the stock.

In past decades Indian economy observed severe business and governmental trading policies and confronted a higher GST. However, recently GST rates are diminished, and for some specific business categories, it becomes twenty-eight to eighteen percent. The government implements this rate immediately, and consequently, it simultaneously affects Hindustan Unilever Limited’s volume growth but only slightly. The stats depict volume growth of 11% for HUL after the cuts in GST-driven prices, but the rate is prolonged and will take time to get established. Nevertheless, HUL demonstrates overall growth in the company’s revenues by 14%, yet the risk-reward is still on the downside, and in the absence of a quick resurgence of volume growth, it features a risk of de-rating. The home care industry is doing well in the Indian economy, but the market for personal care products is still encountering a modest augmentation. By analyzing all the above-given factors, it is recommended to sell the stocks of Hindustan Unilever Limited.

Ralph Lauren Corporation

Buy: do not G.I.V.E; buy

  • Stable dollar
  • Likelihood of an established and stronger economy
  • Profitably analysis shows substantial gains

The United States economy was facing rapid inflation and depicted different issues regarding jobs and consumer prices in previous years. However, the recent progress that was asserted through a minutes meeting of the Federal Open Market Committee took place in late January 2018 and affirmed the elevated expectations of increased rates in coming months. At the same time, the stability of the US dollar was estimated by a famous dollar measurement conducted by ICE; the United States dollar index boosted and increased up to 0.4%. All underlying factors suggest that the financial markets and economy of the United States indicate a steady and more secure economy as compared to the economic condition encountered at the end of the year 2017. The officials addressed this development as “further gradual increases.”

Along with the economy of the United States, the profitability analyses for Ralph Lauren, too, portray a stable and robust condition that is, of course, an outcome of a flourishing and productive market environment. Ralph Lauren updates show a net profit margin of 1.3%; meanwhile, its operating profit margins and gross profit margins are 2.3 and 58%, respectively. RL’s beta factor is estimated at 0.58. Based on the improving market and economy and substantially steady status of the US dollar, it is recommended to investors to do not involve in the selling of Ralph Lauren’s stock and adhere a bit if they have already invested with RL. Moreover, it is the right time to take an investment decision and buy shares of Ralph Lauren because analysts are anticipating low and high revenue for the business, that is, 1.28 billion and 1.37 billion dollars in that order.

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