Brokerages maintained their positive stance on Hindustan Unilever after the fast-moving consumer goods (FMCG) major reported in-line earnings for the June quarter.
What Happened: In its June quarter, HUL reported a 2.7% year-on-year jump in net profit to ₹2,538 crore. Its standalone revenue was up 1.7% from the previous year to ₹15,596 crore. The company said its underlying sales grew 2% while underlying volume growth (UVG) was at 4%.
Brokerage Views: Nomura maintained "buy" call with a target price of ₹3,200. The brokerage said the company is on an improving path with Q1 results tad above estimates. The brokerage sees a recovery in rural demand coming and an improvement in HUL’s market share from here on. The research firm said that though margins are expected to be rangebound in the near term, they are expected to improve in the medium term.
ICICI Securities upgraded the stock to "add" and hiked the target price to ₹2,950. The company reported a 4% UVG led by recovery in rural markets and the management has taken corrective action to improve the proposition of mass skin care, the research firm said.
Key positives for the company include the homecare segment led by UVG of fabric wash brands, the hair care segment which had double-digit volume growth in beauty and well-being, the research firm said. The brokerage was impressed that the firm held on to a majority of corporate market share gains through the inflation and deflation cycle.
Nuvama kept its “buy” call and raised the target price to ₹3,375. The company’s gross margins went up to 50.9% in the quarter, expanding 1.71%, and took price cuts to pass on the benefits of improvements in gross margin to customers, the research firm said.
The brokerage said the company will win market share in personal wash segment due to recent disruption in soaps. The economy is near the exit of adverse cycle of sharp inflation followed by a steep deflation, which makes things better for HUL from a market share perspective, the research firm said.
Morgan Stanley had a “underweight” call with a target price of ₹1,876. The management commentary did not show confidence of strong recovery in the second half of FY25, the research firm said. The management expects price growth to be near zero in the near term if commodity prices remain at the current levels, it added.
Price Action: HUL shares slipped 2.38% to ₹2,700.50 on Wednesday morning.
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