Hindustan Unilever: Competition, inflation to hit margins

The HUL stock, once a darling of investors and considered a defensive bet, has lost 10% in the past three months, making it one of the worst-performing stocks in the sector. What’s worse, it has crashed at a time when the Sensex has gained 3%.

Leading brokerages such as Goldman Sachs, JP Morgan, Nomura, Barclays and others have put a ‘Sell’ on HUL as consumer demand continues to be indifferent because of weak macro parameters and rising inflation.

HUL’s rivals, Nestle and Colgate, have emerged as clear winners, with their stocks logging gains of 7.25% and 6.75%, respectively.

Fund managers say that over the next couple of quarters, HUL may find it tough to maintain its current growth levels due to fierce competition. About 65% of the analysts have put a ‘Sell’ on the stock, against 9.5% who have put a ‘Buy’.