HUL share price slumps to 18-month low, down 4%; buy, sell or hold? | Mint
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Business News/ Markets / Stock Markets/  HUL share price slumps to 18-month low, down 4%; buy, sell or hold?
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HUL share price slumps to 18-month low, down 4%; buy, sell or hold?

Over the last two trading days, the fast-moving consumer goods (FMCG) company's stock has witnessed a 7% downturn following its disappointing performance in the December quarter (Q3FY24), attributed to sluggish demand.

 HUL share price fell 4% on Tuesday's trading session (REUTERS)Premium
HUL share price fell 4% on Tuesday's trading session (REUTERS)

Hindustan Unilever (HUL) shares touched an 18-month low at 2,365.50, experiencing a nearly 4% decline on the BSE during Tuesday's intraday trade, accompanied by substantial trading volumes. 

Over the last two trading days, the fast-moving consumer goods (FMCG) company's stock has witnessed a 7% downturn following its disappointing performance in the December quarter (Q3FY24), attributed to sluggish demand.

Also read: Stock market today: Nifty 50, Sensex fall over 1.5%; mid, smallcaps bleed; investors lose over 8 lakh crore in a day

On January 19, the FMCG company reported a standalone net profit of 2,519 crore for the December quarter of FY24, registering an increase of just 0.55 percent from 2,505 crore in the same quarter of the previous financial year, which came below street estimates.

Moreover, the company disclosed a sequential decline of 7.28 percent in profits, dropping from 2,717 crore in the preceding quarter. The FMCG giant stated in a regulatory filing that its total revenue stands at 14,928 crore, reflecting a 0.38 percent decrease from 14,986 crore in the corresponding quarter of the previous year. Additionally, there was a sequential decline of 0.6 percent in revenue, down from 15,027 crore in the prior quarter.

"Looking forward we expect gradual recovery in market demand to continue aided by increased Government spending, recovery in winter crop sowing and better crop realization. Rural income growths and winter crop yields are key factors that will determine the pace of recovery." said Rohit Jawa, CEO at HUL.

Also read: Five railway stocks including IRFC, RVNL slide up to 14% amid profit booking

HUL stock has fallen by 8 per cent in the last six months and 8.73 per cent in the last one year on NSE.

Should you buy, sell or hold?

Brokerage firm Elara Securities downgraded the HUL stock to ‘Reduce’ from ‘Accumulate’. The agency further reduced the target price from 2,820 to 2,600.

“We pare FY24E/25E/26E earnings 4.6%/6.9%/7.4% to factor in lower-than expected revenue growth and margin. We downgrade HUVR to Reduce from Accumulate with lower TP of 2,600 (from 2,820), as we assign 50x (from 52x on near-term challenges) on Dec’25E P/E to roll forward," Elara Securities said in its report.

Also read: Angel One: This multibagger stock is down 20% in last six sessions, should you buy now?

The brokerage firm further added, “Salience of business winning market share has dipped from 80% in the past year to 60% now. And HUVR expects it to dip further in the next two quarters before it recovers back to 60%+ by Dec-24E. HUVR is focusing on driving competitive volume growth and increasing investments in innovation and brand development. While the easing off of inflation may positively impact gross margin, ad spend may be at higher level. The management expects to maintain EBITDA margin at ~23-24% in the near term."

 

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Published: 23 Jan 2024, 04:12 PM IST
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