2011 going to be good for HUL: Prakash Diwan

In an interview with ET Now, Prakash Diwan, Head - Institutional Business, Networth Stock Broking, shares his views on the outlook of HUL.

What's the story with HUL? For 10 years, nobody liked it, now suddenly everyone is bullish on HUL, when it is still trading at a PE multiple of 24 times?

From a classical valuation perspective, it could probably be overvalued, and you should ideally be underweight on such stocks, but right now, we are vacillating towards the consumption theme being one of the strongest going forward. We also had infrastructure as a story but that has really not taken off. So, the consumption theme is what people have decided out of the two saying 'okay, this is where I want to start betting on'. Within that if you look at the other FMCG players, we have ITC, which has run up significantly. In fact, in terms of market cap growth also if you see in the last couple of years, ITC has had a tremendous upmove there, but HUL has not been able to keep pace with that. So, there is lag, which ideally should not be there so wide between two pairs. So, we believe HUL would correct itself upwards and secondly the restructuring they have done over the last couple of years is actually going to start paying off now, particularly this year. Going forward, 2011-2012 is going to be a very productive year for them in terms of margins as well.