Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Companies / News/  HUL slumps to six-month low after brokerage downgrades
BackBack

HUL slumps to six-month low after brokerage downgrades

At least 10 brokerages caution investors and criticize HUL’s decision to pay a higher royalty to parent

Shares of Hindustan Unilever fell 4.43% to `460.20 on BSE, while the Sensex gained 0.23% to 20,026.61 points on Wednesday. Photo: Pradeep Gaur/Mint (Pradeep Gaur/Mint)Premium
Shares of Hindustan Unilever fell 4.43% to `460.20 on BSE, while the Sensex gained 0.23% to 20,026.61 points on Wednesday. Photo: Pradeep Gaur/Mint
(Pradeep Gaur/Mint)

Mumbai: The stock of Hindustan Unilever Ltd (HUL), India’s largest packaged consumer goods maker, fell to a six-month low on Wednesday after brokerages lowered their outlook on the stock following the firm’s decision to increase royalty payments to parent Unilever Plc.

HUL fell 4.43% to 460.20 on BSE Ltd. The benchmark Sensex gained 0.23% to 20,026.61 points.

At least 10 brokerages including Morgan Stanley, JP Morgan Chase and Co., Credit Suisse, Tata Securities Ltd, Karvy Stock Broking Ltd, Nomura and Edelweiss Securities Ltd cautioned investors and criticized its decision to pay a higher royalty to its Anglo-Dutch parent.

The stock has dropped 7.19% after HUL announced its earnings on Tuesday, when it also said the royalty payment will rise to 3.15% of net sales from 1.4% by 2018 in phases. The company reported a 15.5% increase in net profit, while net sales grew 10.1% from the year earlier.

HUL reported its slowest volume growth in 12 quarters.

Edelweiss Securities downgraded the stock to reduce because of a “slowdown in earnings due to royalty and taxes".

Tata Securities pegged the incremental royalty payment for FY14 at 140 crore, or 4% of profit after tax.

The royalty payment increase has drawn flak from several proxy advisory firms as well.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 23 Jan 2013, 09:50 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie