HUL Shares Fall 5% As Brokerages Cut Price Target After Q4 Results

Shares of Hindustan Unilever Limited (HUL) fell over 5 percent to Rs 2,080 apiece on Monday as a reaction to its weaker-than-expected financial results for the March-ended quarter where reported a 3.4 percent drop in consolidated profit.

On 30 April, the FMCG giant said its net sales for January-March 2020 slipped 9.4 percent to Rs 9,011 crore, the lowest in 9 quarters.

It also reported an underlying volume decline of 7 percent due to the nationwide lockdown that started in March. The most impacted segment was Beauty and Personal Care which saw a 13.5 percent decline in revenue to Rs 3,834 crore.

Following the results, several brokerages cut their target price for the stock while maintaining a "buy" recommendation.

Investec cut its price estimates for the stock by 3-4 percent for FY21-FY22 from Rs 2,516 to Rs 2,397 as it said that the results reflected the on-ground reality of FMCG sector amid COVID-19. It said it remains positive on HUL's portfolio and execution capacity, but said it would wait for a better entry point as valuations are at 48 times FY22 estimates and earnings visibility is low.

Kotak Institutional Equities has downgraded HUL to 'add' from 'buy' but raised target price to Rs 2,300 from Rs 2,250 earlier.

Jefferies cut earnings estimates by 3-5 percent but said that the near-term pressure in the share price is an opportunity to buy. Phillip Capital views the result as a short-term blip and maintained its 'buy' position on strengthening of the stock due to competitive advantage given the 'TINA' factor (There Is No Alternative).