HUL shares fall 2% on mixed Q2 earnings, target cuts by brokerages

Shares of Hindustan Unilever (HUL) fell over 2% to the day’s low Rs 2,493.85 on the NSE after domestic brokerages Kotak Institutional Equities and Nuvama cut their targets on the FMCG major following its September quarter earnings which were mixed.

FMCG major Hindustan Unilever Ltd (HUL) has reported a 4% growth in its standalone net profit at Rs 2,717 crore for the quarter ended September 2023. The same stood at Rs 2,616 crore in the year-ago quarter. The company’s sales rose 4% year-on-year (YoY) to Rs 15,027 crore in the reporting period. The profit beat the ET Now estimate of Rs 2,590 crore, while revenue was slightly below expectations.

The board has also declared an interim dividend of Rs 18 per equity share for the financial year ending 2024. The record date for the said dividend is set as November 2.

The underlying volume growth stood at 2% in the September quarter, which was lower than analysts’ expectations of 3%.

EBITDA for the quarter at 3,694 crore and margins at 24.18% were, however, higher than the estimates of Rs 3,609 crore and 23.5%, respectively.

Kotak Institutional Equities: Add | Target: 2,775
Kotak has an ‘Add’ rating on HUL stock and puts the price target at Rs 2,775 which has been cut from Rs 2,835, earlier.

The brokerage trimmed its FY2024-26E EPS by 4-5% and revised the fair value after the FMCG major reported Q2 sales growth/UVG of 2.5%/2% below its estimates by 50/100 bps.

The 2HFY24 earnings outlook is muted in view of volume growth as pick-up is expected to be gradual and pricing marginally negative, it said in a note.

Nuvama: Buy | Target: Rs 3,210
Brokerage Nuvama has cut its FY24/FY25E EPS by 2%, yielding a revised target price of Rs 3,210 which is lower from an earlier target of Rs 3,280.

“HUL’s Q2FY24 EBITDA/PAT, up 9%/3% YoY, were ahead of our/Street estimates; revenue was up 4% YoY, slightly lower than our and Street estimates. Volumes grew 2% YoY, lower than our Street estimate of 3-4%,” Nuvama said in a note.

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