Hindustan Unilever Shares: Hindustan Unilever Ltd’s (HUL) share price rose four percent in early trade on Thursday after the FMCG giant announced its March quarter earnings. The company beat profit estimates in the fourth quarter despite unprecedented inflation. The FMCG major’s standalone net profit rose 8 per cent 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, the net profit has risen by 3.7 per cent. Standalone revenue from operations came in at Rs 13,462 crore, an increase of 11 per cent on a year ago. On a sequential basis, revenues increased 2.8 per cent.
Hindustan Unilever said operating margins at 24.6 per cent remained healthy even as costs soared. The Indian arm of global consumer goods giant Unilever Plc reported 10 per cent growth in net sales at Rs 13,190 crore for the period under review. The company’s board has recommended a final dividend of Rs 19 for FY22.
“In challenging circumstances, we have grown competitively and protected our business model by maintaining margins in a healthy range. I am also pleased that we have become a Rs 50,000 crore turnover company in this fiscal. Our consistent performance is reflective of 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 Shares: Should You Buy, Hold or Sell?
Brokerage firm Motilal Oswal have kept their EPS forecasts for FY23/FY24 broadly unchanged. HUVR’s pre-COVID earnings had been extremely strong and it reported 18 per cent EPS compound annual rate in the four years ending FY20, before steeper commodity cost inflation and the over-indexed discretionary portfolio adversely impacted its earnings in FY21 and FY22, the note said.
“The company’s pre-COVID earnings growth was particularly impressive given weak mid-single-digit growth posted by its (much smaller) staples peers over the same period. We expect HUVR to return to mid-teens earnings growth. We also believe that HUVR is the best prepared among peers, both on the technology front as well as on the e-commerce strategy level, to deal with the potentially significant disruptions,” Motilal Oswal’s note mentioned.
“Given all these factors, HUVR’s valuations at 47.7x FY24E EPS still leave room for further upside. We maintain our buy rating on the stock with a target of Rs 2,500 (premised on 55x FY24 EPS) implying 17 per cent upside,” the brokerage house said.
Research house Morgan Stanley has maintained equal-weight rating on the stock with a target price Rs 2,381 per share as earnings were ahead of estimates.
Similarly, Broking firm Credit Suisse has kept an outperform rating on the stock and cut the target price to Rs 2,550 from Rs 2,800 per share. Home care saved the day, but BPC and nutrition weakness are concerning, it said. Credit Suisse cut FY23-24e by 9 per cent to factor increase in commodity costs hurting EBITDA margin.
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