Analysts bullish on HUL post Q1 show

Brokerages have raised target prices on Hindustan Unilever (HUL) after the company reported better-than-expected earnings for the quarter ended June.

Shares of Hindustan Unilever ended up 1.55% at ₹2,605.65 on Wednesday.

Most brokerages retained a bullish rating, with JM Financial, CLSA, ICICI Securities, Citi, Macquarie, Morgan Stanley and Jefferies raising target prices by 3-21%.


Jefferies, which raised the target price by the highest quantum to ₹3,050, said that the June quarter results showcase Hindustan Unilever's ability to navigate a tough macro environment, delivering industry-leading Ebitda growth. "Earnings outlook will likely improve in the second half of FY23, led by softening in certain inputs (mainly palm), low base and likely pick-up in rural," said Jefferies.

The company's earnings before interest, tax, depreciation and amortisation (Ebitda) growth of 14% from year-ago levels, beat consensus estimates. HUL reported a 13.85% rise in consolidated net profit at ₹2,391 crore for the June quarter.

Macquarie said the quarterly result highlighted the company's ability to balance volume growth and Ebitda margin in an inflationary environment. "While high-cost inventory will hurt 2Q (second quarter) margin, we remain constructive on expansion in the second half post recent commodity cost correction, especially in palm," said Macquarie.