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Shares of <a target="_blank" href="https://mintgenie.livemint.com/stocks/hindustan-unilever-S0003053">Hindustan Unilever</a> (HUL) rose about 2% in intraday trade on BSE on July 20, a day after the company reported its June quarter scorecard.

As Mint reported, 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%.

The company reported a standalone June quarter profit of ₹2,289 crore against ₹2,207 crore estimated in a Bloomberg survey of analysts. Revenue for the quarter rose 19.7% from a year ago to ₹14,272 crore.

<h2>Brokerages remain positive</h2>Motilal Oswal Financial Services maintained a 'buy' call on the stock with a target price of ₹3,000, citing HUL's sales and volumes were ahead of expectations in Q1FY23 but gross profit, EBITDA, PBT and PAT were broadly in line.

The brokerage firm has raised its FY23 and FY24 earnings per share (EPS) forecasts by 6-7% due to HUL’s healthy quarterly performance.

Motilal said margin pressure led by commodity cost inflation is likely to persist in Q2FY23E, before sequential improvement from Q3FY23E onwards.

Within the premium personal care portfolio, skin care is ahead of pre-Covid levels although colour cosmetics portfolio is still below the pre-pandemic levels despite the recent recovery in mobility, Motilal Oswal pointed out.

Signs of incipient earnings growth recovery are getting better – but only gradually – fueled by a possible good monsoon, fertilizer subsidy, gradual reduction in commodity costs from the decadal high levels and recovery in premium personal care portfolio, Motilal Oswal added.

ICICI Securities maintained an 'add' call on the stock. It has a target price of ₹2,750 on the stock of HUL.The brokerage firm believes the potential upside triggers in terms of large players being beneficiaries of inflation in the medium term and a likely improvement in rural incomes by the second half of FY23 are playing out well even as key downside risks such as delayed recovery in demand, sustained raw material inflation and irrational competition remains.The hope of easing inflation is a positive – the big players have sufficient learnings to protect consumer franchises during such times, said ICICI Securities.ICICI Securities has increased HUL's earnings estimates by nearly 3%, modelling revenue, EBITDA and PAT CAGR of 12%, 13% and 13%, respectively, over FY22-24E.Brokerage firm Nirmal Bang Equities has maintained a 'buy' call on the stock and raised the target price to ₹2,955 from ₹2,650.Nirmal Bang expects HUL's near-term growth to continue, but the demand environment will improve from the second half of FY23, along with sequential margin improvement."There is 0.2%/1.9% upward revision in our FY23E/FY24E EPS, as we bake in slightly higher revenues. We are currently building in about 14.3% earnings CAGR over FY22-25E," Nirmal Bang said.Brokerage firm JM Financial maintained a 'buy' call on HUL and raised the target price to ₹2,820 from ₹2,600 and said HUL remains one of its favoured picks. "Bad news is well-known and the going is likely to only get better hereon," it said.<h2>Some downgrades</h2>Some brokerage firms have downgraded the stock of HUL primarily owing to the recent gains in the stock but have raised their target price estimates.Brokerage firm Elara Capital has downgraded HUL to an 'accumulate' from a 'buy' because of the stock's rich valuation."We downgrade Hindustan Unilever to an 'accumulate' from a 'buy' as the stock price has surged 20% in the past three months, and arrive at a target price of ₹2,755 (earlier ₹2,620) as we assign a 55 times P/E on FY24E EPS of ₹50.1," said Elara.Kotak Securities has also downgraded the stock to an 'add' from a 'buy' while fixing the target price of ₹2,750."We raise HUL's FY2023-24E EPS by 3%, rollover and revise fair value to ₹2,750 from ₹2,525, implying 50 times Sep-24E PE. Downgrade a notch to an 'add' from a 'buy' following the recent rally," Kotak said.YES Securities has downgraded the stock to a 'neutral' from an 'add' with a target price of ₹2,624 even as it cited the company is well placed to tackle this transient inflation-led soft volume growth period with offsets like cost and productivity levers coupled with and continued innovation and premiumization."We increase our EPS estimates by 5-6% and now build in revenue, EBITDA and PAT CAGR of 13.6%, 14.2% and 15.2%, respectively, over FY22-24E. As the stock has run up recently, we downgrade from an 'add' to a 'neutral' rating with a revised target price of ₹2,624 based on 50 times FY24E earnings," said YES Securities."Despite near-term margin concerns, we remain structurally positive on the company and recommend keeping adding the stock on any declines with a re-rating expected as soon as inflation starts cooling off," the brokerage firm added.Disclaimer: The views and recommendations made above are those of individual analysts or broking firms and not of MintGenie.

HUL shares rise after Q1; brokerages positive amidst some downgrades

<ul><li>HUL reported a standalone June quarter profit of ₹2,289 crore against ₹2,207 crore estimated in a Bloomberg survey of analysts. Revenue for the quarter rose 19.7% from a year ago to ₹14,272 crore.</li></ul>

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