Hindustan Unilever posted
first quarter results below the Street expectations. The revenue, earnings before, interest, tax, depreciation and amortisation (EBITDA) and profits missed estimates.
EBITDA came in at Rs 3,521 crore, lower than the CNBC-TV18 poll of Rs 3,650 crore, while margins marginally improved 40 bps to 23.6 percent, as against 23.2 percent year on year.
The company is facing rising competitive intensity, hence the FMCG player's volume growth is at five quarters low of 3 percent. Further, there are headwinds from lower pricing growth.
The Street is cautious on the company's outlook, given that recovery will take time due to macro headwinds. Jefferies has downgraded the stock to 'hold' rating and target price is cut to Rs 2,770 from Rs 2,875/share. The Earnings Per Share (EPS) estimates are cut by 1-3 percent. Antique Stock Broking has also cut its earnings estimates by 2 percent and 1 percent for FY24 and FY25.
HSBC says the volume growth trajectory and extent of margin gains will be main catalysts for company growth. HSBC has assigned a buy rating and Rs 2,950 as the target price.
JP Morgan says it has been an unexciting quarter for HUL and weather risks remain a key watch. The brokerage has an overweight rating and is positive on quarter on quarter improving trends in rural India sales. CLSA maintains outperform rating on HUL with target price at Rs 2,925.
Nuvama says the demand situation is dynamic given uncertainty around the
macro environment. However, HUL is well placed in terms of supply chain preparedness. That said, to incorporate the miss in numbers, Nuvama is cutting FY24 and FY25 EPS by 3 percent each, yielding a target price of Rs 3,280.
HUL is trading 1.6 percent lower on July 21 morning.
