Shares of Hindustan Unilever Limited or HUL rose 2 per cent to hit an intraday high of Rs 2315.40 on BSE after the company posted its earnings for the quarter ended December 2021.
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The stock opened a tad higher at Rs 2,282 against the previous close of Rs 2,261.60. With a market capitalisation of more than Rs 5,40,000 crore, the shares stand lower than 5-day, 20-day, 50-day, 100-day and 200-day moving averages.
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HUL posted a 16.8 per cent year-on-year rise in standalone net profit at Rs 2,243 crore in the quarter ended December 31, 2021, as India’s largest consumer goods maker gained market share in both urban and rural areas amid the COVID-19 pandemic. The company had posted a net profit of Rs 1,921 crore in the year-ago period.┬а
Also read:┬аHUL Q3 results: Standalone PAT rises 17% to Rs 2,243 cr, revenue up 10%
Revenue from operations rose 10.2 per cent to Rs 13,183 crore as compared to Rs 11,959 crore in the corresponding quarter last fiscal, it said in a regulatory filing.
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The company stated that business fundamentals remained strong with handsome market share gains in all our divisions, both urban and rural markets and across price segments. Underlying Volume Growth at 2 per cent was significantly ahead of the market, it added.
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Brokerage house Prabhudas Lilladher noted that the near-term volume outlook is cautious due to tepid sales growth of 6.9% in personal care and 3.3% in Food and Refreshments, lack of visibility on rural demand recovery, 2% volume growth impact due to grammage reduction in LUPтАЩs and further price hikes to counter 30% YoY input cost inflation (Ocean freight 200%, Crude oil 80%, CPO 60% and Polyethylene 40% YoY).
Also read:┬аSteep price hikes, cut in A&P lifts HULтАЩs finances in Q3
However, the brokerage firm remains positive on the longer-term structural story given sustained market share gains, strong innovation pipeline, scale-up in emerging categories and distribution gains from strategies like WIMI and SHIKHAR.
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“We expect 10.9% Sales and 13.6% PAT CAGR over FY22-24 and assign a DCF based target price of Rs 2900 (Rs 2930 earlier). We believe risk-reward is favourable at 44x FY24 EPS and 2% dividend yield,” it added.
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IDBI Capital noted that the inflationary headwinds have been stronger than expected which led to the steepest decline in gross margins since the last 6 quarters. Margins are likely to remain under pressure. However, calibrated price hikes and cost savings should aid in achieving normalcy.
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“Accordingly, we have trimmed our EPS estimate for FY22E by 4% factoring in lower margin expectations. We maintain ‘BUY’ with a revised target price of Rs 3,098 at 60x FY24E EPS,” it added.
