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Q4 result impact: Brokerages mixed on HUL; CLSA cuts target to Rs 1,950
Jefferies maintained its hold rating on Hindustan Unilever post-March quarter results but raised its target price to Rs 1,820 from Rs 1,770 earlier
Global brokerages are mixed on Hindustan Unilever (HUL) post Q4 results. The FMCG major registered 14 percent jump in its March quarter net profit at Rs 1,538 crore against Rs 1,351 crore in the same quarter last fiscal.
Revenue of the company increased 9 percent to Rs 9,945 crore against Rs 9,097 crore. The company's domestic consumer business growth stood at 9 percent while underlying volume growth was at 7 percent.
Reacting to the results, Jefferies raised target price while CLSA slashed its respective target price.
HUL has maintained growth leadership over the last six quarters (10 percent volume growth) led by strong product portfolio and remarkable execution, but margins will remain modest from here-on, suggest experts.
CLSA maintained its outperform rating on Hindustan Unilever but slashed its 12-month target price to Rs 1,950 from Rs 2,010 earlier.
The volume growth of 7 percent looks good in the context of peer performance. There is a marked shift in the near-term outlook as growth rates have moderated.
From current levels, margin gains will be relatively modest, said the CLSA note. The global investment bank tweaked EPS to factor in the higher tax rate. “We have yet to build in upgrade from GSK acquisition,” said the note.
Jefferies maintained its hold rating on Hindustan Unilever but raised its target price to Rs 1,820 from Rs 1,770 earlier.
The Q4 results were better than peers but not good enough. A 7 percent growth in volume was on a high base which was a positive surprise, it said.
Valuation remains rich at 45x FY21 P/E. Jefferies slashed its estimates in the base business by 3 percent.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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