Moneycontrol Bureau
Shares of HUL were beaten down on Monday as 3 percent volume growth in the December quarter disappointed the street. Over-optimism on growth hopes led by slew of brokerage upgrades had earlier driven the stock 24 percent higher year-to-date.
However, the FMCG stock began the retreat soon after the company announced its December quarter earnings; profit after tax before exceptional items stood at Rs 955 crore, down 10 percent compared to same quarter last year. Its third quarter net profit jumped 17.9 percent year-on-year to Rs 1,252 crore, mainly led by income from a land parcel sale. The oral care business of the company suffered due to rollback of excise duty benefits.
The stock shed 6 percent intraday on Monday, before closing at Rs 892.80, down Rs 49.65 or 5.27 percent.
Analysts are disappointed after the dismal performance and suggest to avoid it at the moment. Naveen Kulkarni, Co-Head of Research at PhillipCapital says the stock will correct a little bit. “In any case we were expecting this quarter not to be particularly strong because the base had a lot of promotional activity. For example in the personal care segment the relaunch of Fair & Lovely was in the base quarter. Also in the oral care category there was lot of promotional activity because of which the base was little higher. So, volume growth on that base has been a little disappointing,” he adds in an interview to CNBC-TV18.
Suruchi Jain, equity research analyst at Morningstar Investment Advisor also feels that the stock is overvalued now and one should avoid it for short term as fundamentals are not supporting it.
Market expert Ambareesh Baliga agrees that the stock is likely to see more correction.
(Posted by Nasrin Sultana)
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