HLL garnered some gains to move off an almost five-year low touched in morning trades.

Institutions were largely responsible for the scrip picking up from the depths, rising 0.68% to Rs 148.95 by 11:00 IST. The scrip of the FMCG major had recovered from its low of Rs 145.10 by then. It had also registered a day's high of Rs 149.35, earlier. Volumes of over 1.44 lakh shares were notched up on the counter on BSE on Tuesday.

The scrip has now fallen 16.75% to its day's low of Rs 145.10 from Rs 174.30 on 24 February 2003.

As per market talk, DSP Merrill Lynch Broking has been pursuing the stock in morning trades.

Tuesday's rise is being attributed to a technical rebound after the stock as well as the market witnessed a sustained fall over the last few days following concerns over a prolonged war manifesting in West Asia. However, analysts are not confident that the scrip will hold on to the higher levels and supplies are expected to follow.

Already, there are concerns over the company's performance, which is expected to be dismal. There's worry that a prolonged war will further erode the company's earnings. The rise in crude oil will escalate cost of production and further impact sales of HLL.

There is also wide anxiety that domestic sales of FMCG and pharmaceutical companies may be adversely affected due to the introduction of the uniform Value Added Tax at the rate of 12.5% from 1 April 2003, replacing the sales tax levied by various state governments. Due to this, many dealers have cut down their existing inventories and are postponing fresh intake until April 2003 (starting Tuesday), when there will be more clarity on VAT.

The current rate of sales tax is around 7 to 8% on an average, across the country. However, the uniform VAT is fixed at 12.5%. In addition, considering the trade discounts and commissions, the effective rate is likely to be around 15.5%. Further, the industry is also worried about the treatment of stock-in-trade of goods at the wholesaler and retailer end. As a result, some wholesalers and retailers have requested companies to take back stocks as of 31 March 2003, while a few others have substantially reduced their purchases.

HLL continues to pass through a turbulent period, with a substantial slowdown in its domestic business in the past 8-12 quarters. An adverse monsoon in 2002 also further distanced any recovery in demand for the company's products. Analysts say demand is likely to remain subdued, with growth expected to remain flat for the next two quarters. Although, the management is aggressively restructuring its business, the macro environment remains challenging.

For the full year ended 31 December 2002, HLL recorded a 7% growth in bottom line to Rs 1,755.68 crore (Rs 17.55 billion), but a 7% drop in top line to Rs 9,954.85 crore (Rs 99.54 billion). For the fourth quarter ended 31 December 2002, HLL registered a 7% growth in bottom line to Rs 466.51 crore (Rs 4.66 billion) on a 2% decline in top line to Rs 2634.5 crore (Rs 26.34 billion). At the profit after tax but before EO level, the company has registered a 9% growth in net profit to Rs 542.84 crore (Rs 5.42 billion).

As on 31 December 2002, the promoters' holding in HLL was 51.6%, while the public, domestic institutions and FIIs held 21.4%, 13.4% and 12.83%, respectively.

BSE code: 500696