Shares of consumer goods maker Hindustan Unilever Ltd fell as much as 2.9 per cent to Rs 1,701 rupees, in its biggest intraday percentage fall since May 2, as the company’s net profit missed street estimates.
The company, which manufactures branded products such as Ponds, Lux, Surf, Dove and Brooke Bond, posted a net profit of Rs 1,529 crore during the quarter which was about 19 per cent higher than Rs 1,283 crore in the year-ago period.
Sales grew 3 per cent to Rs 9,356 crore in the April-June quarter from Rs 9,094 crore in the corresponding period last year.
HUL delivered a steady Q1, helped by a low base, but the volume growth trajectory is likely to taper down as base normalises and the overall demand pick-up remains modest, Jefferies analysts say. The brokerage has downgraded the stock to “hold” from “buy”, and has maintained a price target of Rs 1,680.
Given additional headwinds of rising input prices and competitive pressures, it would be difficult for the comapny to maintain pace of margin expansion, Jefferies says.
Consistency of performance is impressive, Kotak Institutional Equities says, adding that sustaining these levels of growth would need acceleration in market volume growth from the current 5-6 per cent levels.
Morgan Stanley has retained “underweight” on the stock with a price target of Rs 1,260, saying that global consumer companies like HUL are likely to face higher risk of a disruption from smaller, more agile companies nibbling at incumbents' market share.
Hindustan Unilever stock hit an all-time high of Rs 1,780 in early trading; up 28 per cent this year as of last close.
(With inputs from Reuters)
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.