HUL hits fresh 52-week high; 5 top global brokerages not bullish on it

Shares of Hindustan Unilever ( HUL) hit fresh 52-week high of Rs 1,195 on Wednesday after the company reported better-than-estimated financial results for the quarter ended June 30, 2017.

The FMCG major on Tuesday reported an over 9 per cent rise in standalone net profit at Rs 1,283 crore for the April-June period, while some of its business verticals saw a muted quarter due to ‘destocking’ in view of the GST rollout from July 1. The company announced the earnings post market hours on Tuesday.

The company had posted a standalone net profit of Rs 1,174 crore for the corresponding quarter of the previous year.

Global brokerages Citi and Credit Suisse maintained ‘neutral’ ratings of HUL with a target price of Rs 1,200 per share.

Shares of HUL were trading 0.35 per cent higher at Rs 1,162 around 10.30 pm (IST). However, it eventually closed the day 0.46 per cent down at Rs 1152.90.

Citi sees better value in Emami and Dabur.

HSBC said “Q1 revenue and earnings growth were significantly above street estimates on strong execution. We expect margin expansion and revenue growth to accelerate in FY18.” The global financial services firm raised target price to Rs 1,275 per share from Rs 1,070 per share.

Morgan Stanley maintained an ‘underweight’ rating on HUL with a target price of Rs 870 per share.
“Without recovery in volume growth see risk of derating,” according to Morgan Stanley.

HUL is expecting the rural demand to revive on good monsoon and loan waivers to farmers by some states. Besides, HUL is looking up to its trade partners to soon attain “normalcy” post GST and is working closely with them to restore it.

Japanese brokerage firm Nomura raised the target price of HUL to Rs 1,138 per share from Rs 1,057 on account of expectation of rural and urban demand recovery. However, the brokerage house remained neutral on HUL due to high valuation despite strong Q1 numbers.

On the outlook, HUL Chairman Harish Manwani in a release said: “We remain positive on the medium-term outlook for the industry and will continue to drive consumer value, which also delivers profitable volume driven growth for the company.”