Shares of fast-moving consumer goods major Hindustan Unilever (HUL) were in focus on Tuesday after some reports suggested that the company is in the race to buy a majority stake in MDH Spices.
A report had claimed HUL is in talks with the Delhi-based Mahashian Di Hatti Pvt. Ltd (MDH) to buy a majority stake.
The consumer goods company is reportedly in talks with MDH to reach a deal. According to the report, MDH could be valued between Rs 10,000 crore and Rs 15,000 crore, given its pan-India appeal.
FMCG major HUL, which owns popular household brands such as – Lux, Lifebuoy, Surf Excel, Rin, Wheel, Ponds – declined to comments on the issue.
“We do not comment on market speculation,” said an HUL spokesperson.
The stock opened a tad higher at Rs 2,055 against the previous close of Rs 2,051.45. However, the stock tanked over 4 per cent to hit an intraday low of Rs 1,969.25 on BSE. The market cap of the company fell to Rs 4,63,574.36 crore.
“As per the reports, HUL is in talks to buy the majority share in MDH Spices. The stock may witness value buying at lower levels of 1880 – 1850 for the target of 2100 in near term.
Investors may wait for the correction from the current levels and enter at lower levels for value gains,” Dr. Ravi Singh, Vice President & Head of Research, ShareIndia told Business Today.
The reports suggested that MDH promoters are in talks to sell their business to HUL.
Terming such reports as “completely false, fabricated and baseless”, MDH in a message posted on its official Twitter account urged people “not to believe such rumors”.
“MDH Pvt Ltd is a legacy, which Mahashay Chimi Lal Ji and Mahashay Dharampal Ji nurtured all their lives. We are committed to taking that legacy forward with all our heart,” said a message from MDH Chairman Rajeev Gulati.
Financial services firm Avendus estimated the branded spices market size will be doubled to Rs 50,000 crore by 2025, however, the market is dominated by regional champions.
Spice business has been a tough market to crack for bigger companies, as consumer preferences and cooking habits differ from state to state. The MDH brand is, however, has a wider presence in the country through its innovative TV commercials.
MDH has had a wider presence in the country through its innovative TV commercials over the decades.
MDH Spices sells more than 60 products across the country and deals with at least 1,000 wholesalers and hundreds of thousands of retailers. Its website claims the company can produce a whopping 30 tonnes of spices a day.