Hindustan Unilever Ltd (HUL) share price rose four percent in early trade on April 28 a day after the company announced its March quarter earnings.
FMCG major HUL on April 27 declared an 8.6 percent rise in standalone post-tax profit at Rs 2,327 crore for the fourth quarter ended March 2022 as against Rs 2,143 crore recorded a year ago.
On a sequential basis, the net profit has risen by 3.7 percent. Standalone revenue from operations came in at Rs 13,462 crore, an increase of 11 percent on a year ago.
On a sequential basis, revenues increased 2.8 percent.
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Here is what brokerages have to say about the stock and company after March quarter earnings:
Prabhudas Lilladher
HUL has given cautious commentary as high input costs and inflation will continue to weigh on volume growth and margins in the first half of this year.
We expect 11.0% sales and 13.6% profit after tax compound annual rate over FY22-24 and assign a DCF based target of Rs 2384 (Rs 2356 earlier).
We have marginally increased our FY23/24 earnings per share by 0.7/1.2% on calibrated price hikes and cost synergies.
Risk reward is favourable at 44x FY24 EPS and 2% dividend yield, but we expect returns to be back-ended given near term volume pressures and volatility in input costs. Retain buy.
Motilal Oswal
We have kept our EPS forecasts for FY23/FY24 broadly unchanged.
HUVR’s pre-COVID earnings had been extremely strong and it reported 18% EPS compound annual rate in the four years ending FY20, before steeper commodity cost inflation and the over-indexed discretionary portfolio adversely impacted its earnings in FY21 and FY22.
The company’s pre-COVID earnings growth was particularly impressive given weak mid-single-digit growth posted by its (much smaller) staples peers over the same period. We expect HUVR to return to mid-teens earnings growth.
We also believe that HUVR is the best prepared among peers, both on the technology front as well as on the e-commerce strategy level, to deal with the potentially significant disruptions.
Given all these factors, HUVR’s valuations at 47.7x FY24E EPS still leave room for further upside. We maintain our buy rating on the stock with a target of Rs 2,500 (premised on 55x FY24 EPS) implying 17% upside.
Sharekhan
HUL posted resilient numbers aided by a strong portfolio of brands across price points helping it to gain market share in key categories and across markets.
The company is focusing on premiumisation and market development to improve penetration in key categories and digitalisation to drive consistent earnings growth in the medium to long term.
We maintain a buy recommendation on the stock with an unchanged price target of Rs 2,456.
Credit Suisse
Broking firm has kept an outperform rating on the stock and cut the target price to Rs 2,550 from Rs 2,800 per share.
Home care saved the day, but BPC and nutrition weakness are concerning, it said.
Credit Suisse cut FY23-24e by 9% to factor increase in commodity costs hurting EBITDA margin.
The gross margin was under pressure, but cost savings protected EBITDA margins, reported CNBC-TV18.
Morgan Stanley
Research house has maintained equal-weight rating on the stock with a target price Rs 2,381 per share as earnings were ahead of estimates.
Market share gains remain a positive.
The company management cautioned against rising near-term inflation, weak volume growth and margin risks, reported CNBC-TV18.
At 09:19 hrs HUL was quoting at Rs 2,206.75, up Rs 62.50 or 2.91 percent on the BSE.
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