1. HUL shares fall post Q4; what are analysts saying about the stock

HUL shares fall post Q4; what are analysts saying about the stock

HUL reported a 6.19 per cent rise in standalone net profit at Rs 1,183 crore for the fourth quarter ended March 31 as compared to Standalone net profit of Rs 1,114 crore in the same period previous fiscal.

By: | Published: May 18, 2017 12:51 PM
HUL reported a 6.19 per cent rise in standalone net profit at Rs 1,183 crore for the fourth quarter ended March 31 as compared to Standalone net profit of Rs 1,114 crore in the same period previous fiscal.

Hindustan Unilever (HUL) shares declined over 2 per cent on Thursday despite the FMCG major reporting a 6.19 per cent rise in standalone net profit at Rs 1,183 crore for the fourth quarter ended March 31 as compared to standalone net profit of Rs 1,114 crore in the same period previous fiscal. The company said robust sales across various business segments helped the company posting a 6 per cent growth. At 12.10 pm, HUL share price was trading 1.25 per cent down at Rs 993.75. The share price opened at Rs 1014 and touched a high and low of Rs 1014 and Rs 986, respectively, in trade so far. Sensex was trading 99.03 points down at 30,559.74 during the same time.

The company’s total income for the quarter under review stood at Rs 8,969 crore, as against Rs 8,430 crore in the year-ago period, up 6.39 per cent. For the year ended March 31, the company posted a consolidated net profit of Rs 4,490 crore, up 8.16 per cent from Rs 4,151 crore during the previous fiscal. Total income of the company rose to Rs 36,128 crore as against Rs 35,039 crore in the 2015-16.

The company remained optimistic about the medium term outlook for the FMCG sector. While announcing the fourth quarter results on Wednesday, it said category wise performance for the fourth quarter was as follows: broad-based growth in home care segment with brands like Surf and Vim liquid putting up strong performances, rebound of both personal wash and personal products during the quarter. However, foods business grew modestly due to strong comparators in the previous year with Kissan brand growing well in the quarter.

Analysts have given a thumbs up to HUL’s results. Brokerage House Sharekhan has maintained the ‘Buy’ recommendation on the stock with a revised target price of Rs1,100. It said,”Despite a sharp increase in the Raw Material (RM) prices, the gross margin marginally dipped by 28BPS to 47.2%, mainly on account of premiumisation, a better revenue mix and prudent reduction in promotional offerings. The Operating Profit Margin (OPM) improved by 91BPS to 18.6% in Q4FY2017 on the back of lower Advertising spends and reduced Employee Cost. The operating profit grew by 12.2% YoY to Rs1,651.0 crore, beating our as well as street expectations.”

Analysts like KRChoksey – Institutional Research and Edelweiss Finance have maintained a ‘Hold’ rating on the stock with target price of Rs 1044 and Rs 1,009, respectively. On its further outlook, Edelweiss said,”HUL is key beneficiary of share gains helped by GST. Increased launches in natural space will contain share loss and propel growth. However, the success of new launches is key. Impact of cannibalisation on core portfolio is a monitorable.”

KRChoksey – Institutional Research, which has called the fourth quarter results a ‘stellar quarter’ said, “HUL faced the challenge and price of input cost moderated, market environment stabilized and in turn gave profitable volume growth. HUL strategy will remain same which is investing in its brands and focusing in core business. It is a player with a presence in both rural and urban areas and majorly improvement is seen in demand from rural which is benefitting for the company. HUL has continuously shown sustained margin and revenue growth because of its distribution network and its market leadership in the categories. We are expecting revenue growth of around 5% in FY18E & FY19E.”

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