Brokerage firm Edelweiss Securities has maintained a ‘buy’ call on FMCG major Hindustan Unilever (HUL) and raised the target price to 3,050 from ₹2,785, implying an upside potential of 17%.
Shares of Hindustan Unilever ended at ₹2,605.65 on the BSE in Wednesday’s trade, up 1.55 percent from the previous close.
At the time of writing, the stock was trading at 67.30 times its trailing 12-month EPS of 39.00 per share and 12.47 times its book value. At current levels, the stock is trading 37.84 percent above its 52-week low of ₹1,901.6 and 9.08 percent below its 52-week high of ₹2,859.3.
HUL's share price went from ₹2,657 to ₹2,604 levels delivering a return of over 2 percent since its Q1 result announcement on July 19. The stock has climbed from ₹2,205 to ₹2,604 in the last one month, generating a return of 18.09 percent.
HUL beat street estimates to clock an 11% growth in June quarter profit as price hikes lifted revenues, even as sales at India’s largest packaged goods maker grew a more tepid 6%.
On the technical charts, the stock is trading 14.06% above its 200-day moving average. On the other hand, the Relative Strength Index (RSI) of the stock stands at 72.7.
Hindustan Unilever posted strong numbers amid a tough environment, domestic volume grew 6 percent YoY on a base of 9 percent. Home care shot up 30 percent YoY led by a strong performance in fabric wash and household care. Personal care expanded 17 percent YoY, which was broad-based. Hair care grew in double-digits. Food grew 9 percent YoY led by strong ice cream growth.
According to brokerage, EBITDA margin compression of 110bp YoY came from continued pressure from inflationary trends as well as higher ad spends. While GM will be under pressure in the near term, improving portfolio mix, cost control and price hikes should aid EBITDA margin.
“HUL saw strong gains in both value and volume terms. Inflation continues to put margins under pressure in Q2FY23. Skincare was well above pre-covid levels while colour cosmetics was slightly lower than pre-covid. Benign palm oil prices can lead to price drops for some categories. We also expect HUL to benefit from rising urban and out-of-home consumption,” said Edelweiss Securities.
An average of 38 analysts polled by MintGenie have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.