Global investors sell Unilever India stock as sales growth falters

Global investors have cut holdings of Hindustan Unilever Ltd. to a four-year low as the company grapples with weak consumer demand and rising competition.Foreign funds reduced their ownership of India’s largest staples company to 12.7 per cent at the end of March, down from as high as 14.5 per cent in June last year, according to data compiled by Bloomberg. The firm’s shares have slumped more than 9 per cent in the past 12 months, the second worst performer in the NSE Nifty 50 Index. Investors have sold Hindustan Unilever and its consumer-giant peers as they found it hard to justify the expensive valuations of the companies amid faltering sales growth. The firm has been facing competition from new-age brands, while lower agricultural yields have sapped demand among its rural customer base.“Overseas investors will look at the parent company trading at less than half the valuation multiple,” said Abhay Agarwal, a fund manager at Piper Serica Advisors Pvt. in Mumbai. Revenue growth has slowed significantly and the “three-year sideways movement in the stock during a rising market has brought in some wariness,” he said. While foreign funds have been selling, the proportion of Hindustan Unilever’s shares owned by domestic investors has risen to a record 13.2 per cent, data compiled by Bloomberg show. Parent Unilever Plc and other members of the group own just over 60 per cent, while retail investors have about 12 per cent.