Hindustan Unilever Ltd (HUL) shares rose over 1% in early trade on Wednesday, i.e. 24 July, after the fast-moving consumer goods (FMCG) company reported an increase of 14.4% in consolidated net profit to Rs 1,795 crore for the first quarter (Q1) ended June.
At 9:47 am, HUL shares were trading at Rs 1,709.75, up nearly 1%, on BSE after hitting an intra-day high of Rs 1,712.30. The stock has risen by merely 1.5% in the last one year.
HUL’s standalone net profit jumped 14.8% year-on-year to Rs 1,755 crore during the June quarter, while revenue rose 6.6% to Rs 10,114 crore.
However, the company’s volumes grew at the slowest pace in seven quarters, at 5%, amid a slowdown in consumption in the economy.
The fall in volume growth is on account of base effect of the goods and services tax (GST) rate cuts in the previous quarters, Sanjiv
Mehta, HUL’s chairman and managing director, said in a press conference after the earnings announcement. “It’s not a train wreckage as it is still a pretty decent growth for a company of our size.”
The company performed well at the operating level during the June quarter, with earnings before interest, tax, depreciation and amortization (Ebitda) rising 18% to Rs 2,647 crore and margins jumping 250 basis points to 26.2%.
“Against the backdrop of moderate market growth, HUL has delivered a resilient performance driven by the expansion of our consumer franchise, improvement in portfolio mix and sustained growth in margins,” said Mehta.
After the earnings, Credit Suisse maintained a ‘neutral’ call on the HUL stock, but raised the price target price to Rs 1,880 from Rs 1,850 per share. It expected growth to remain muted and margin expansion to get tougher for the company going ahead.
Citi also gave a ‘neutral’ rating on the stock while cutting the target price to Rs 1,850 from Rs 1,867 earlier. The business model has ample levers to flex, to ensure a steady outcome, it added.
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