Shares of Hindustan Unilever (HUL) fell more than 4 percent in morning trade on BSE on January 20, a day after the company announced better-than-expected December quarter numbers.
As Mint reported, HUL beat Street expectations with a 12 percent rise in quarterly net profit, with the maker of household goods gaining from higher demand for products and easing inflationary pressures.
HUL’s standalone net profit climbed to ₹2,505 crore for the three months ended December 31, 2022, from ₹2,243 crore a year earlier. A Bloomberg survey of analysts forecast the company to report a profit of ₹2,488 crore.
Shares of HUL have seen decent gains in the last one year, outperforming the benchmark Sensex. However, it has underperformed its sectoral index BSE FMCG.
Over a year, HUL shares are up 14 percent against a 2 percent gain in benchmark Sensex. BSE FMCG index is up 18 percent.
Brokerages retain positive views
Most brokerage firms have maintained their positive views on the stock after the company's December quarter earnings.
Brokerage firm Motilal Oswal Financial Services has maintained a ‘buy’ call on the stock with a target price of ₹3,100 and said HUL’s operating performance in Q3FY23 was in line with expectations while PBT and PAT beat its estimates by nearly 8 percent, driven by higher-than-expected other income.
Motilal underscored while rural recovery and commodity cost declines are taking longer than expected, the company's management believes that the worst is over and HUL will be a clear beneficiary on both fronts.
"HUL continues to exhibit remarkable dexterity, despite its size, led by (1) its WIMI and cluster-based approach, (2) its technological edge over peers, and (3) funnelling massive cost savings back into the business for growth. On rural recovery and commodity cost reductions (commentary on both is gradually getting better), we believe that HUL will get back to the mid-to-high teens earnings growth trajectory that it exhibited for the four years before Covid," said Motilal Oswal.
ICICI Securities maintained an 'add' call on the stock with a target price of ₹2,850. The brokerage firm upgraded its earnings estimates by nearly 3 percent for FY24E; modelling revenue, EBITDA and PAT CAGR of 13 percent, 14 percent and 15 percent, respectively, over FY22-24E.
Brokerage firm Kotak Institutional Equities also has an 'add' call on the stock with a target price of ₹2,825. The brokerage firm has tweaked the revenue forecast, factored in an increase in royalty, incorporated the termination of a distribution contract with GSK-CH and trimmed earnings per share (EPS) estimates by 2-3 percent.
Among the global brokerages, Jefferies maintained an ‘outperform’ call on HUL with a target price of ₹3,100, reported CNBC-TV18.
Jefferies, as per CNBC-TV18, highlighted HUL's Q3 was in line, volume growth was ahead and the home-care business outperformed.
Citi has also maintained an ‘outperform’ call on the stock with a target price of ₹3,050. CLSA, too, maintained an ‘outperform’ call with a target price of ₹2,950, reported CNBC-TV18.
According to a MintGenie poll, 39 analysts on average have a ‘buy’ call on the stock.
Disclaimer: The views and recommendations given in this article are those of the broking firms. These do not represent the views of MintGenie.