Why India Is Great News For Shareholders In Unilever Plc

Having recently increased its stake in Hindustan Unilever to 67%, Unilever plc (LON: ULVR) is in a fantastic position to go from strength to strength

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Recent news flow coming out of India has not been particularly positive. There have been a series of disappointing results from companies providing capital goods to India’s power and infrastructure sectors, with the latest being Bharat Heavy Electricals, which reported far weaker earnings than expected.

Of course, India’s Prime Minister remains upbeat and is talking about all sorts of reforms the country can make. The mood, however, is negative.

However, all of this does not put me off the India growth story and certainly does not dampen my enthusiasm for Unilever (LSE: ULVR) (NYSE: UL.US).

Certainly, India is experiencing a difficult time and is not performing quite as well as many investors would have hoped. But it still offers boundless potential, especially for consumer goods companies such as Unilever.

As mentioned, the company has a two-thirds stake in Hindustan Unilever and this gives it access to the highly lucrative Indian market. Indeed, Unilever is perfectly positioned to benefit from a country where over one billion are gradually starting to use more and more consumer goods. For instance, sales of health and beauty products, washing powder and cooking sauces are increasing at a rate that developed markets can only dream of, with Unilever building up a loyal customer base through its trusted brands such as Dove, Knorr and Vaseline.

Sure, there will be highs and lows during this period of growth, and there will inevitably be periods when growth rates are less than expected. However, the trajectory is upwards and the growth potential is compelling.

Of course, to access such potential, one must be willing to pay for it. Unilever currently trades on a price-to-earnings ratio of 21, which may at first seem very high. However, earnings per share are expected to grow at around 10% per annum in each of the next two years and, with there being such vast long-term potential, I think the significant premium is well worth it.

If, like me, you are keen on finding the most exciting growth stocks then I would recommend you take a look at this exclusive report, which provides you with another compelling growth opportunity.

The report is completely free and is best described as The Motley Fool’s Top Growth Stock Of 2013.

> Peter does not own shares in Unilever. The Motley Fool has recommended shares in Unilever.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Investing Articles

Young female business analyst looking at a graph chart while working from home
Investing Articles

Hunting for income shares to buy after the market dip? Then remember this

Harvey Jones says the recent dip makes now a brilliant time for investors to go hunting for FTSE 100 dividend…

Read more »

Investing Articles

£10,000 invested in BAE Systems shares at the start of 2025 is now worth…

Harvey Jones's BAE System shares have smashed the market so far in 2025. Yet while this remains a core FTSE…

Read more »

A young black man makes the symbol of a peace sign with two fingers
Investing Articles

As UK shares plunge, dividend yields soar! These 2 income stocks look appealing

The stock market took a hit earlier this month, but it's not all doom and gloom. Mark Hartley uncovers two…

Read more »

Investing Articles

Here’s why I think investors should consider this FTSE 100 rival instead of Rolls-Royce shares

Rolls-Royce shares have had a great run, but I don't see much more gas in the tank. When thinking in…

Read more »

Dividend Shares

Here’s a 6-stock ISA portfolio that could make £1.55k in monthly passive income

Jon Smith outlines some of his favourite income stocks that could be used within an ISA to generate a 7%+…

Read more »

Investing Articles

Forecast: by April 2026, the Apple share price could turn £1,000 into…

The Apple share price is down almost 20% from the fallout of US tariffs, but has the market overreacted? Zaven…

Read more »

Investing Articles

Down 72%, can this former FTSE darling get its mojo back?

With luxury brands getting hit by weak consumer confidence and trade wars, Andrew Mackie examines the health of this FTSE…

Read more »

Investing Articles

Forecast: in just 12 months, the Sainsbury’s share price could turn £1,000 into…

J Sainsbury’s share price is tumbling as a rival retailer makes aggressive moves to recapture market share. But could this…

Read more »