Tag: Hindustan Unilever

HUL analysts expect a gradual recovery in volume growth in FY25; Stock falls over 2%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Shares of Hindustan Unilever Ltd. (HUL) fell up to 2% in Thursday’s trade even after the company’s March quarter numbers came in line with the Street expectations. HUL reported a decline in revenue and profit while domestic volume grew about 2% for the fourth quarter.

The commentary by a couple of brokerages was uninspiring for investors with HSBC and Jefferies reiterating ‘Hold’ recommendations, while Nuvama trimmed earnings per share (EPS) estimates even as it retained a ‘Buy’ stance on the HUL stock.

Nuvama analysts have slashed their FY25 and FY26 EPS estimates by 7% and 5.5%, respectively, and said that they will watch out for a gradual rural recovery and a likely good monsoon.

However, Motilal Oswal said there is no material change in its EPS estimates for FY25 and FY26.

“The valuation at <45 times FY26E EPS is reasonable given its last five-year average P/E (price-earnings) of 60 times on one-year forward earnings,” the brokerage said while reiterating a ‘Buy’ rating and a target price of ₹2,900 per share, considering favourable risk-reward.

In the transition phase of the last 12 months, volume growth was weak and value growth was affected by price cuts, Motilal noted.

The brokerage expects a gradual recovery in volume growth in the current financial year, driven by its own initiatives and gradual improvement in demand.

The impact of price cuts is expected to persist in the first half of FY25, but the volume print should improve during this phase and the full revenue recovery will be visible in H2FY25, as highlighted by Motilal in its report.

According to Amnish Aggarwal of Prabhudas Lilladher, risk-reward looks favourable after little returns in the last four years; however, significant re-rating looks unlikely given valuations at 44.6 times FY26 and market momentum in favour of cyclicals.

The brokerage has upgraded the stock to ‘Accumulate’ from ‘Hold’ earlier for moderate returns over the next 12-15 months.

Analysts at Emkay Global said HUL’s struggle to revive growth and recoup margin from 23% is reflected in the stock’s valuation, which has seen a steady de-rating.

The management commentary in the earnings call suggests actions are in place, though with a lag, which is where it continues to see hiccups.

Going ahead, the brokerage said it remains concerned about the demand slum, its inability to drive in-time innovation, competitive stress, and weak business mix.

HUL posted a net profit of ₹2,406 crore, which was in line with the CNBC-TV18’s poll of ₹2,438 crore. The company’s revenue also stood in line with expectations for the quarter.

EBITDA or Earnings before Interest, Tax, Depreciation and Amortisation came in at ₹3,435 crore, which was also in line with expectations of ₹3,430 crore. EBITDA margin stood at 23.1%, also meeting estimates.

The management expects FMCG demand to continue to improve gradually. They also remain optimistic about the mid-term impact of better monsoons and improving macro-economic conditions.

In case commodity prices remain where they are, HUL expects price growth to be a negative low-single digit.

At 11:24 am, the scrip was trading 1.77% lower at ₹2,220.30 apiece on the NSE. The stock has declined more than 16% so far this year and is down 10% over the last 12 months.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Hindustan Unilever evaluating various options for ice cream business: Exclusive

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Hindustan Unilever Ltd. is evaluating various options for its ice cream business, the company told CNBC-TV18 exclusively in a statement. The move comes after its parent Unilever Plc, decided to spin off its $8 billion ice cream business.

The company said in a statement that it will hold discussions with the board and Unilever’s management in the coming month and further communication will be disclosed one the approach is finalised.

Ice cream contributed 3% to HUL’s overall revenue in financial year 2023.

Here’s the company’s response to CNBC-TV18:

Unilever today announced a strategic intent to separate the Ice Cream business. Through this, they intend to transform Unilever into a simpler, more focussed, and higher-performing company. The ice cream business has an inherently different business model, including a cold-chain Go-to-Market operating model, seasonality, and a different innovation rhythm compared to the rest of Unilever’s business.

As far as the Indian ice-cream business is concerned, we are evaluating the various options in light of this announcement. We will discuss this with the HUL Board and Unilever management in the coming months. Once the approach is finalised, we will communicate further. Ice creams contributed to 3% of HUL Revenue in FY23.

We have a very robust cost savings program in HUL called Symphony, that we have been driving for many years now. Through an end-to-end focus across all lines of the P&L, we have been generating gross savings of nearly 6% of turnover every year. This provides us crucial fuel for growth allowing us to invest competitively behind our brands and future capabilities. We will closely assess the global initiatives of Unilever under the productivity programme and assimilate best practices to take Symphony to its next phase.

Shares of Hindustan Unilever are trading 0.3% lower at ₹2,261. The stock has declined 10% over the last 12 months.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Unilever will spin off the $8 billion ice cream business

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

British fast-moving consumer goods giant said today (March 19) that it will spin off the ice cream business.

All the ice cream brands of the company had a combined revenue of
€7.9 billion ($8.6 billion). Some of the top selling global ice cream brands including Wall’s, Magnum and Ben & Jerry’s.

“Under the Growth Action Plan we have committed to do fewer things, better, and with greater impact,” Hein Schumacher, CEO of Unilever (market capitalisation $122 billion) said in a press statement.

The proposed changes are expected to impact around 7,500 predominantly office-based roles globally, with total restructuring costs now anticipated to be around 1.2% of Group turnover for the next three years, it further added.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Digitisation is India’s big growth driver, says Hindustan Unilever CEO Rohit Jawa

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Hindustan Unilever (HUL) Managing Director and CEO, Rohit Jawa on Friday, February 9, pondered the transformative role of digitisation in driving India’s economic growth. In an interview with CNBC-TV18, Jawa also emphasised the pivotal role of artificial intelligence (AI) in shaping the future landscape, particularly in the realm of customised consumer offerings.

Digitisation: The Big Growth Driver

Jawa said that digitisation stands as the primary catalyst for India’s economic advancement. The integration of technology into various sectors has not only streamlined processes but has also unlocked unprecedented opportunities for growth, he said, adding that he envisions a future where digital initiatives will play a pivotal role in fostering innovation and efficiency across industries.

“A big driver of growth is digitisation. It has democratised India … the India tech stack has changed unlike any other country in the world, including China. So I think what we’re seeing here is pioneering it is transformational. It’s changing how we do business. And it’s also changing consumers’ aspirations. So whether you’re in a village, in the deep rural east of India, or you’re in Mumbai, you can watch the same sort of media,” Jawa said.

He added, “I think we must recognise that this a vast country of 1.4 billion people — we have to be responsible towards our communities, towards the environment. But we have got to keep in mind that it has to be a positive impact as we grow to a very powerful market and an economy in the next decade or so.”

AI’s Role in Customized Consumer Offers

Highlighting the impact of AI, Jawa discussed how HUL leverages AI to create personalized offers for consumers. Through advanced algorithms and data analytics, Jawa said companies can now tailor their products and services to meet the specific needs and preferences of individual consumers. This approach not only enhances customer satisfaction but also contributes to brand loyalty, he said.

“We have now AI signals for our demand forecasting, so we don’t need human intervention. In fact, they forecast better. We’re using them even in financials,” Jawa said.

“When it comes to customers,” Jawa added, “we have 2.6-2.7 million stores of which 1.3 million, including some in rural areas, have signed up on our app. A million of those order every month. And now we get data signals from all our customers — what they’re buying, what they are ordering. And we’re able to market to them using AI; we can create customised offers. And we’re doing it with a digital selling hub, control that sits here. So imagine the amount of data that we’re collecting and the value-adds we can offer our customers in finance or on managing the shop better,”

Triple Growth in Some Segments within a Decade

Jawa expressed optimism regarding the growth potential in certain segments, predicting a tripling of growth within the next decade. He attributed this projected surge to the ongoing digital revolution and the innovative strategies adopted by companies to adapt to the changing landscape. According to Jawa, the ability to harness technology effectively will be a key determinant of success in this rapidly evolving market.

“Our per capita consumption of FMCG, even in the categories in which we play, is only $50-odd. If you compare that with Indonesia, it has four times as much. China, six times as much. So there’s a huge runway for growth. And when we looked at every category, we play in, we see that we are about 10-15 odd years behind these mega markets. In some categories, the journey could be a little faster and in some, slower, but what I’m saying is the next decade, we could be seeing some categories doubling, tripling, or even quadrupling,” Jawa added.

ONDC: Democratising E-Commerce in India

Touching upon the Open Network for Digital Commerce (ONDC), Jawa hailed it as a game-changer that will democratise e-commerce in India. The initiative aims to create a level playing field for businesses of all sizes, fostering healthy competition and providing consumers with a diverse range of choices. Jawa believes that ONDC has the potential to reshape the e-commerce landscape, making it more accessible and inclusive.

Also read: India’s largest FMCG company gets analyst downgrades after subdued Q3 results

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India’s largest FMCG company gets analyst downgrades after subdued Q3 results

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Shares of Hindustan Unilever (HUL) fell 2% in trade on Saturday, January 20, after analysts at most brokerage firms slashed their targets on the fast-moving consumer goods (FMCG) sector bellwether following its December quarter earnings which were muted.

India’s largest consumer goods company posted muted Q3 numbers with flat revenue and net profit rising a mere 0.6% year-on-year—below Street’s estimates. Volumes grew 2% YoY against Street’s forecast of 2-3%. HUL in its investor presentation mentioned that the operating environment remains challenging.

Uncertainty looms large

HUL’s third quarter performance was below expectations on revenue and profit, and this does not appear to be merely a symptom of macro weakness, said global broking house HSBC while downgrading the stock to ‘Reduce’. The brokerage also trimmed its target price to ₹2,350 from ₹2,700 a share earlier.

The foreign brokerage also said that HUL’s outlook appears uncertain and growth is lacklustre.

Morgan Stanley said HUL’s numbers were below estimate for the fourth quarter in a row. The company reported weaker top-line growth due to lower volume growth, it said while maintaining an ‘Equal-weight’ call on the stock.

The brokerage doesn’t see any recovery in sight and said that negative pricing growth remains a headwind. It has also cut its target to ₹2,424 a share, implying a downside of 5% from the current market levels.

Emkay Global also cut its target on the stock to ₹2,700 from ₹2,800 earlier as it believes that the demand slowdown, competitive pressure, distribution stress, and rising royalty rates are likely to have an overhang on HUL’s valuations.

“Capturing demand pressure, we have revised our topline expectations down by 3%, which led to a 3% cut in earnings. We are now 6-7% below consensus expectations for FY25 and FY26,” the domestic brokerage firm said.

Maintaining an ‘Add’ rating with a limited upside, Emkay said the stock’s valuations at 46 times for FY26, though factoring in near-term pressure, may see a derating if volume recovery remains elusive in FY25.

According to Nuvama, the miss on sales and weak revenue was due to price cuts taken to pass on the benefit of commodity deflation.

“Home care dipped 1% YoY while BPC remained flat. Food & refreshments delivered pricing-led growth of 1% YoY. Overall, HUL posted decent volume growth in home and personal care that was marred by a dip in F&R. All in all, we are cutting FY24E/25E EPS by 5%/3%, yielding a revised target of ₹3,105 (earlier target ₹3,210); maintain ‘Buy’,” the brokerage said.

HUL’s concall highlighted that the company expects pricing growth of 4-5% in the longer term. The rural premium portfolio has also grown well like the urban premium portfolio. Urban continues to outpace rural. The company generates 30% of its revenue from price point packs; these help it gain more penetration, and are an important part of the company, as per Nuvama.

Meanwhile, Deepak Shenoy of Capitalmind in a tweet on X said he finds it strange how markets work sometimes. He cited HUL’s 1% increase in earnings, 0.5% increase in sales and a PE multiple of 58 times.

Note: The stock market is engaged in a complete session on Saturday, January 20, and will be closed on Monday, January 22, due to a public holiday in Maharashtra state to mark the inauguration of the Ram Temple in Ayodhya city.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

HUL Q3 Results: Management says operating environment challenging after 2% volume growth

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Hindustan Unilever Ltd. reported volume growth of 2% for the October to December quarter, which was flat on a sequential basis and was lower than the 5% volume growth it reported during the same period last year.

A CNBC-TV18 poll had projected HUL’s volume growth to be between 2% and 3%.

The company in its investor presentation mentioned that the operating environment remains challenging.

India’s largest consumer goods company said that there has been a gradual recovery in volumes, albeit on a soft base and while urban markets continue to remain resilient, rural remains subdued.

HUL reported a net profit of ₹2,519 crore, which was lower than the CNBC-TV18 poll of ₹2,655 crore. On a year-on-year basis, the bottom line was up 0.6%.

Revenue for the quarter stood at ₹15,188 crore, compared to the CNBC-TV18 poll of ₹15,385 crore. Even on a year-on-year basis, HUL’s revenue was nearly the same as the December quarter last year.

EBITDA or Earnings Before Interest, Tax, Depreciation and Amortisation was at ₹3,540 crore, which was marginally lower than the ₹3,695 crore projection from the poll.

EBITDA margin rose by 10 basis points from last year to 23.3% but missed expectations of 24% by 70 basis points.

Among the various business segments, the Home Care business saw revenue decline 1.3% from last year, but the EBIT fell 9%. Even the EBITDA margin of the home care business was under pressure, falling 150 basis points from last year to 17.7%.

Beauty and Personal Care segment’s revenue remained flat from last year, while EBIT increased by 2%. Margins of the BPC segment grew by 50 basis points to 25.6% from 25.1%.

Volume growth for the beauty and personal care business grew in mid-single-digits led by hair and premium skin businesses. The skin cleansing business declined from last year due to price cuts, while the oral care business grew in mid-single digits led by Closeup.

Shares of HUL had ended 0.8% higher at ₹2,567 ahead of the quarterly results.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Rajasthan | Hindustan Lever-Brookfield to set up 45-MW solar park in line with net zero goals

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

FMCG major Hindustan Unilever Ltd (HUL) on Friday (December 1) said the company has partnered with Brookfield to set up a solar energy park with 45 MW capacity in Rajasthan.

The project will be developed at the site of Brookfield’s solar park, being undertaken as a part of the Brookfield Global Transition Fund, according to a stock exchange filing.

HUL’s board of directors has sanctioned an equity investment of up to 27.73% in Transition Sustainable Energy Services One Private Ltd, a special purpose vehicle (SPV) created by Brookfield under the government’s Group Captive Open Access Renewable Energy Scheme.

This project aligns with India’s COP26 goal of reaching 500 GW of non-fossil energy capacity by 2030, utilising group captive models for renewable energy procurement.

Also Read: Raymond appoints Berjis Desai as independent legal counsel

HUL is well placed to deliver on Scope 1 and 2 emissions reduction in line with the commitment to zero emissions in its operations by 2030. The company is also committed to net zero emissions for all its products — from sourcing to the point of sale — by 2039, the company added.

Rohit Jawa, HUL CEO and MD, said, “Collaboration is key to achieving our net zero commitment. The proposed green energy partnership is a step in the right direction. I am sure this will pave the way for more such transformative partnerships that align with environmental and economic sustainability and will help stakeholders across the value chain.”

Nawal Saini, Managing Director of Renewable Power & Transition, Brookfield, said the company is excited to form this unique partnership wherein it will be supplying green energy at scale to HUL and its suppliers from a single location in Bikaner, which is a part of its larger 550-MW solar park.

Also Read: Whirlpool Corporation plans to sell up to 24% stake in Indian arm next year

Shares of Hindustan Unilever Ltd ended at ₹2,563.25, up by ₹16.55, or 0.65%, on the BSE.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

IBLA exclusive: India is much more than a consumption story

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

India’s time has come, and the ongoing decade could give India its best consumer story, said jury members of the India Business Leaders Award (IBLA) on Tuesday, October 31 during a panel discussion. The jury members included Manny Maceda, CEO, Bain & Company, Chair, IBLA, Standard Chartered Bank’s Zarin Daruwala, Mahindra Group’s Anish Shah, Federal Bank’s Shyam Srinivasan, Hindustan Unilever’s Rohit Jawa, CaratLane’s Mithun Sacheti, Olympic Champion Abhinav Bindra, Meta India’s Sandhya Devanathan and Zerodha’s Nikhil Kamath.

“The hunger to have a better quality of life is the best consumer story of the decade,’ said Jawa, managing director and chief executive officer, Hindustan Unilever.

“If you look back five years, the middle class and above have doubled; we expect that to double again. They consume at a much higher factor of consumption, one or two times. So, we will see a huge amount of breakthrough and consumption,” Jawa added.

Anish Shah, MD and CEO, Mahindra Group believes India is much more than a consumption story, and the country is taking leadership in the world today.

“The key area we’re seeing is one with regard to combating climate change, that’s creating a host of opportunities in India. The solar challenge, or the renewables challenge that has been put out by the Prime Minister, is one that is enabling us to grow our solar business multi-fold, and you’re going to see that across multiple industries that will contribute to renewables.”

Zerodha co-founder and chief financial officer (CFO) Nikhil Kamath noted that India is slowing comparatively lower than the rest of the world. He also lauded the current government for selling the India story well to the world.

“I think everything is relative from a global lens; they look at India in a very sanguine manner in comparison to how much they are slowing. So we might be slowing a little bit in the last couple of quarters, but I don’t think we are doing as badly as the rest of the world. For many reasons that hold true to a large extent, I think the way the India story has been sold to the world by the incumbent government and the narrative that has been set has really helped India. So I think, kudos to them for having created that over the last decade.”

Mahindra Group’s Shah also pointed at Indian companies, including his own, competing with the best in the world.

“Indian companies are making world-class products, and are beating global leaders in India. I think we have multiple Indian companies, not just Mahindra, making products today that can stand up to anyone in the world and be able to go there. So to me, that is a very significant change from what we have seen in the past.”

Highlighting Mahindra Group’s efforts in this regard, Shah added, “Mahindra tractors is number one globally in terms of volume. And in multiple markets around the world, we are starting to gain significant share and starting to get into the top five and top three. As we are looking at automobiles, our SUVs today are now being taken to a few key markets globally. We aim to get to a 15 to 20% market share in those markets, which is not insignificant.”

India is seeing similar trends that other markets have witnessed in the last one or two decades, HUL’s Jawa added.

“I have some experience seeing other markets in the last 10–20 years that have gone from a few $1,000 per capita to middle income, and so on and so forth. I think I can already see those trends. In fact, some are even faster… So I think the hard infrastructure is getting better, so I think we might even see a much faster trajectory going forward, because the stage is set.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India’s top 10 firms lose Rs 1,93,181.15 crore in market valuation

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

All the top 10 most valued firms suffered a combined erosion of ₹1,93,181.15 crore in market valuation last week, with Tata Consultancy Services (TCS) and HDFC Bank taking the biggest hit, in line with the bearish trend in equities.

In a holiday-shortened last week, the BSE benchmark tanked 1,614.82 points or 2.46%.

The market valuation of TCS plunged ₹52,580.57 crore to ₹12,25,983.46 crore, the most among the top 10 firms.

HDFC Bank’s market capitalisation (mcap) slumped ₹40,562.71 crore to ₹11,14,185.78 crore.

The valuation of Reliance Industries Limited dropped ₹22,935.65 crore to ₹15,32,595.88 crore and that of Infosys tumbled ₹19,320.04 crore to ₹5,73,022.78 crore.

The mcap of Bharti Airtel fell by ₹17,161.01 crore to ₹5,13,735.07 crore and that of Bajaj Finance diminished by ₹15,759.95 crore to ₹4,54,814.95 crore.

ICICI Bank’s valuation tanked ₹13,827.73 crore to ₹6,39,292.94 crore and that of ITC slipped ₹5,900.49 crore to ₹5,40,637.34 crore.

The market capitalisation of Hindustan Unilever declined by ₹3,124.96 crore to ₹5,83,098.06 crore and that of State Bank of India dipped ₹2,008.04 crore to ₹5,00,670.73 crore.

In the ranking of the top 10 firms, Reliance Industries continued to retain the title of the most valued company followed by TCS, HDFC Bank, ICICI Bank, Hindustan Unilever, Infosys, ITC, Bharti Airtel, State Bank of India and Bajaj Finance.

Disclosure: Reliance Industries Limited controls Network18, the parent company of CNBCTV18.com.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

The Street view on HUL is at its worst in over a year

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

India’s largest FMCG player Hindustan Unilever Limited (HUL) has been a five-year market laggard now, in part due to unwinding of a significant past re-rating phase, said global brokerage firm HSBC. The brokerage has downgraded its rating to ‘Hold’, reducing the target price on the HUL stock to Rs 2,700 per share from Rs 2,950 earlier.

HSBC’s target on the stock suggests a further upside of 8.6% from its last closing price of Rs 2,485.5 on the NSE. The stock has tumbled 3% since the beginning of this year, as against a 5% gain in the Nifty50 index.

The September quarter results of HUL were marginally below expectations. HUL’s lackluster performance has further contributed to its struggles, and the weakness continues to persist in its portfolio. HSBC sees limited upside potential for HUL unless there is a significant shift towards risk-averse market sentiment.

Key factors behind limited upside

The FMCG conglomerate’s price-to-earnings ratio jumped from 40 times in 2017 to 60 times, which is now unwinding. “Growth has come down and structural margin expansion prospects have waned. Hence, this de-rating phase will persist,” according to HSBC analyst Amit Sachdeva.

With a rise in competition from regional and local players, HUL is also witnessing market share loss in the mass end of the segment.

Rural recovery is expected to be gradual and regional competitive intensity continued to remain high. Advertisement spends are likely to remain firm in the near term, given the competitive intensity and brand building.

HSBC said that the growth in homecare segment, which steered HUL’s overall performance until now, has peaked due to a high base and rising competition from local and regional companies and is creating a growth overhang.

Meanwhile, foods growth hasn’t been encouraging for many quarters, and beauty and personal care segment has its own challenges, Sachdeva said.

“The number of local players that have come in the market have just increased. In tea, small players’ market value has grown 1.4 times that of large players. In detergent, small players’ market value has grown 6 times that of large players,” HUL’s Chief Executive Officer Rohit Jawa said post Q2FY24 earnings.

HUL posted a 3.86% year-on-year rise in standalone net profit at Rs 2,717 crore for the second quarter. Sales for the quarter rose 3.53% YoY to Rs 15,027 crore, it said in a BSE filing.

The domestic volume growth came in at 2%, compared to CNBC-TV18’s poll of 3-4% growth.

Most analysts have maintained their ‘Hold’ call on the counter. According to Emkay Global, HUL is likely to see a muted near-term show, given rural slowdown hurting its volume growth and pricing turning flat-to-negative.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow