After opening weak at ₹2,108 post results, shares of Hindustan Unilever bounced back partly on Monday. Currently, HUL shares are hovering around ₹2,126.30, down 2.25 per cent, even as benchmark indices BSE Sensex and Nifty 50 tumbled almost 5 per cent.

Though the stock market gave the thumbs down to its ‘disappointing’ quarterly results on the back of the Covid-19 crisis, analysts still remain bullish on the stock, but have moderated their return expectations from the stock.

HUL, post market hours on Thursday, had reported a 3.43 per cent decrease in consolidated net profit to ₹1,520 crore for the fourth quarter ended March 31, 2020, against ₹1,574 crore posted in the year-ago period. The performance during the quarter was impacted by disruptions due to the coronavirus. The revenue from operations during the March quarter stood at ₹9,905 crore, a 1.1 per cent decrease from the year-ago period’s ₹10,018 crore.

Motilal Oswal Financial maintained its ‘buy’ stance on HUL but reduced the target price to ₹2,420. “We remain positive on HUL from a medium-term perspective due to: best of breed earnings growth potential, significant synergies in FY22E as a result of GSKCH, and its RoCE levels being well ahead of peers.”

Also read:https://www.thehindubusinessline.com/companies/hul-q4-net-profit-down-4-per-cent-at-1512-crore/article31473238.ece

Emkay Global retained its ‘hold’ rating on HUL with a one-year price target of ₹2,300. “Q4-FY20 results disappointed with headline numbers coming in lower than expected by 6-16 per cent,” it said.

Edelweiss Securities, while retaining the ‘buy’ recommendation, said: “We remain positive on HUL’s ability to outgrow the market, as well as its pricing power underpinned by distribution expansion, deepening direct reach and product innovation initiatives.”

Demand shift (in the wake of GST rollout) from the unorganised segment should result in additional gains for HUL. “The merger of GSK portfolio with HUL is bound to yield revenue delta; we believe the larger story would be innovation and NPDs (new product development) in HFD (Health Food Drinks) and allied categories,” it added.

Centrum Broking expects continued sluggishness in the beauty and personal care (BPC) segment to cap HUL’s volume growth in the near term. It, however, maintained its ‘add’ rating and the DCF-based target price of ₹2,219.

In ICICI Securities view, optics mattered the most this time. “In this analyst’s over 20 years experience (including working at HUL corporate), the conservatism or risk aversion (what we sensed now) was the highest ever. We reckon HUL is preparing for a long drawn downtrading cycle, channel and trade disruptions and limited P&L ammunition to fight these risks. (HUL with its significant focus on premiumising the categories may have missed out on strengthening the brand equity of mass market portfolio in the last decade),” I-Sec cautioned.

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