BackHUL shares fall 2.75% as brokerages cut target price
Shares of HUL closed 2.75% lower, after falling as much as 3.5% in intraday trade, after most brokerage analysts cut the company's target price
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Mumbai: Shares of India’s largest packaged consumer goods maker Hindustan Unilever Ltd (HUL) on Monday extended their loss for the second day, falling as much as 3.5%, its steepest fall since 13 May, after the company reported weak earnings for the June quarter.
The fall was due after most brokerage analysts cut the company’s target price. Domestic brokerages such as PhillipCapital, SBICap Securities and Motilal Oswal have reduced their price target for the stock.
In intraday trading, the stock touched a low of ₹ 888.40 a share, a level last seen on 7 July. In the last two days, the stock fell 5.45% and so far this year, it gained 4.16%.
Shares of HUL closed at ₹ 895.15 apiece on BSE, down 2.75% from its previous close, while India’s benchmark Sensex index rose 0.15% to close at 27,787.62 points.
The company reported anaemic sales growth in the three months ended 30 June, missing analysts’ revenue estimates by around 6%, indicating that an expected recovery in rural demand is yet to take root. HUL’s sales by volume grew by just 4% in the fiscal year’s first quarter.
Net profit rose 9.8% to ₹ 1,173.90 crore in the three months ended 30 June from ₹ 1,069.16 crore a year ago. Net sales by value rose 3.57% to ₹ 7,987.74 crore from ₹ 7,712.71 crore a year ago.
Also Read: HUL misses revenue estimates, indicating rural headwinds
“HUL has been struggling from sluggish volume growth for the past four quarters, and we expect it to underperform the sector in terms of volume growth by ~200bps," broking firm PhillipCapital said in a note to its investors.
“While expectations of an improvement in consumer demand have increased riding on good monsoons and higher government spend, growth is yet to pick up, as the management indicated further slowdown in demand in 1QF17. Our estimates factor in an improvement in growth in F17e, but we can see downside risks on account of HUL’s weak earnings performance and slower volume momentum," SBICAP Securities said in a note to its investors.
PhillipCapital has maintained its “sell" rating on the stock and reduced its target price by 9% to ₹ 830 a share, SBICap Securities has maintained its “hold" rating on the stock and reduced its target price by 5% to ₹ 875 a share, while Motilal Oswal has maintained its “neutral" rating on the stock and reduced its target price by 7% to ₹ 860 a share.
Of the analysts covering the stock, 16 have a “buy" rating, 21 have a “hold" rating, and 10 have a “sell" rating, according to Bloomberg data.
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