Hindustan Unilever Shares: Hindustan Unilever Ltd (HUL) share price rose four percent in early trading Thursday after the FMCG giant released its quarterly results for March. The company beat earnings estimates in the fourth quarter, despite unprecedented inflation. The FMCG major’s standalone net profit increased by 8 percent to Rs 2,327 crore for the quarter ended March 31, 2022. It was Rs 2,143 crore in the same period of last year.
On a sequential basis, net profit increased by 3.7 percent. Its standalone operating income came in at Rs 13,462 crore, up 11 percent from a year ago. On a sequential basis, revenues grew 2.8 percent.
Hindustan Unilever said operating margins at 24.6 percent remained healthy, even as costs rose. The Indian branch of global consumer goods giant Unilever Plc reported a 10 percent growth in net sales at Rs 13,190 crore for the reporting period. The company’s board of directors has recommended a final dividend of Rs 19 for FY22.
“In challenging conditions, we have grown competitively and protected our business model by keeping margins in a healthy range. I am also happy that we have become a Rs 50,000 crore turnover company in this fiscal year. Our consistent performance reflects our strategic clarity, the strength of our brands, operational excellence and dynamic financial management of our business,” said HUL CEO and Managing Director Sanjiv Mehta.
HUL Stocks: Should You Buy, Hold or Sell?
Brokerage firm Motilal Oswal has kept their EPS forecasts for FY23/FY24 largely unchanged. HUVR’s pre-COVID earnings were extremely strong, reporting a compound annual rate of 18 percent EPS in the four years ended FY20, before steeper commodity cost inflation and the over-indexed discretionary portfolio negatively impacted earnings in FY21 and FY22 , the note said. †
“The company’s earnings growth before COVID was particularly impressive given the weak single-digit growth posted by its (much smaller) staple colleagues over the same period. We expect the HUVR to return to earnings growth in the mid-teens. We also believe that HUVR is best prepared among peers, both at the technology and e-commerce strategy level, to address the potentially significant disruptions,” said Motilal Oswal’s note.
“Given all these factors, HUVR’s valuations at 47.7x FY24E EPS still leave room for further upside potential. We maintain our buy recommendation for the stock with a target of rupees 2,500 (assuming 55x FY24 EPS), which represents upside potential of 17 percent,” the brokerage said.
Research firm Morgan Stanley maintained the rating of the stock with a price target of Rs 2,381 per share as earnings came in ahead of expectations.
Likewise, brokerage firm Credit Suisse has maintained an outperform rating for the stock and lowered its target price to Rs 2,550 from Rs 2,800 per share. Home care saved the day, but BPC and nutritional deficiencies are a cause for concern, it said. Credit Suisse cut 9 percent FY23-24e to account for the rise in raw material costs hurting its EBITDA margin.
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