Here's why Amnish Aggarwal is bullish on Britannia stock
«The second one is as far as the ice cream business is concerned, the business is not very large as far as HUL is concerned. It contributes just maybe 2.5-3% to total sales and it is under-indexed in terms of margins,» says Amnish Aggarwal, Prabhudas Lilladher.
What is your take? Is this reaction on HUL stock on account of that expected rejig in the ice cream business warranted?
Amnish Aggarwal: There are two factors to it. If you look at broadly why the sector is doing well and Lever is doing well from quite some time, this is due to expectations regarding uptake in demand due to normal monsoon this year. Given the fact that in the rural sector we have seen two wheelers in some of the other segments you can say growing in the past at least two to three quarters and in the last quarter rural was going ahead of urban in many of the segments, so that seems to be the one reason.
The second one is as far as the ice cream business is concerned, the business is not very large as far as HUL is concerned. It contributes just maybe 2.5-3% to total sales and it is under-indexed in terms of margins.
So, to that extent I think if they move out of this business, how they move out, I think it is very I would say guesstimate as of now. But definitely, I think market may be factoring in some sort of a move coming because even if you presume a size of say around 1500 crores for the business, now the value it can create by complete sell-off or something else, so there could be some gains on account of that also.
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