Should you invest in Hindustan unilever ? These are some of the reasons to look at:
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The price to earnings ratio for HUL is at 74.
The dividend yield it offers is 1.11%.
It has been paying out a consistent dividend payout.
It has 0 debt.
It has a high ROE and ROCE.
It’s a manufacturer of inelastic goods which means the demand for its products isn’t volatile.

It has a highly diversified product line.
It has been able to show earnings growth for the past decade.
It has brand value.
It is the market leader in multiple avenues.

If a company is as strong as HUL what could be the potential downsides to it? The answer is simple look at its valuation.
It commands the valuation of a tech company growing at a huge rate with ratios such as 74.

They have been paying out a majority of the earnings as dividend which point out two things: a) they are experiencing slowing growth b) they are boosting their company valuations.

Let us now employ the Gordon’s equation (dividend yield + earnings growth) to look at what your investment returns will be if you buy HUL right now: 11-13% (earnings growth) + 1 (dividend yield) = 12-14% return.

Now compare this to its biggest rival ITC which is in a similar position to it in terms of product diversity etc.
returns on investment: 10-14% (earnings growth) + 5% dividend yield = 15-19% return on investment.
Note: Gordon’s equation extracted from “the intelligent investor”

I have taken conservative earnings growth for ITC and exhuberant growth for HUL yet it seems HUL cannot seem to compare in terms of investment returns. It can be argued that HUL is stronger than ITC products wise but the fact remains HUL is overpriced.

This leads me to my final concluding statement which @HowardMarksBook put very well, “no asset is a great buy at any price”. Even if HUL is a good quality asset it fails to be a sub-par investment as it’s intrinsic value is much below what it’s current valuation is. @anand_srini