Hindustan Unilever Ltd (HUL) shares were in focus on Friday a day after the fast-moving consumer goods major reported a strong set of quarterly results. HUL shares rose as much as 1.8 percent to Rs 2,302.3 on BSE.

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Hindustan Unilever, after market hours on Thursday, reported a net profit of Rs 2,243 crore for the October-December period, up 16.8 percent on a year-on-year basis. Its revenue increased 10.4 percent on-year to Rs 13,092 crore.

Analysts in a CNBC-TV18 poll had estimated the company's net profit at Rs 2,210 crore over revenue of Rs 13,000 crore.

HUL reported Rs 3,279 crore in earnings before interest, taxes, depreciation and ammortisation (EBITDA) for the December quarter. Its EBITDA had stood at Rs 2,854 crore for the corresponding period a year ago. The company's EBITDA margin came in at 25.05 percent, as against 24.06 percent a year ago.

Analysts in the CNBC-TV18 poll had estimated the company's EBITDA at Rs 3,200 crore and EBITDA margin at 24.6 percent.

HUL's volume growth in the domestic business was at two percent, as against the estimate of 1-2 percent by analysts.

"The stock has corrected more than 20 percent from Rs 2,700-2800 levels, and the company is gaining market share in almost 70-80 percent of categories. Once these hikes are in place and inflation stabilises at some point, you will see better margins also coming back," Gurmeet Chadha, Co-Founder and CEO at Complete Circle Consultants, told CNBC-TV18.

The rural business will also start to perform better with the Budget expected to give a thrust, he said. "The urban business is doing better, but eventually, even the rural consumption will go up," he said.

Chadha prefers Tata Consumer Products over HUL.

What brokerages say

Jefferies | Buy | Target price: Rs 2,900

The company's price hikes have driven its double-digit revenue growth, according to Jefferies. The brokerage, however, added that HUL's near-term outlook is clouded by weak consumption trends and stiff inflation in raw materials.

CLSA | Outperform | Target price: Rs 2,725

HUL is relatively better positioned but lacks tailwinds for the stock to perform, according to CLSA. The brokerage believes HUL's mean valuation has reverted to a five-year average.

Credit Suisse | Outperform | Target price: Rs 2,800

The company has reported modest improvement in a tough environment and is expected to deliver healthy mid-teens earnings growth in FY23, according to the brokerage.

Morgan Stanley | Equal-weight | Target price: Rs 2,766

The FMCG company's Q3 earnings beat estimates, and the management sounded optimistic on its performance going forward, according to the brokerage.

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(Edited by : Akanksha Upadhyay)

First Published:Jan 21, 2022 10:37 AM IST