Analysts at brokerages have cut their price targets on Hindustan Unilever by 3-9 per cent after the fourth quarter results to factor in the expected slowdown in sales on account of the rural slowdown.

Company’s revenue in the March quarter increased 9.3 per cent to Rs 9,945 crore from the same period a year ago, largely in line with analysts’ expectations. Hindustan Lever’s earnings were better than its peers, but analysts have taken note of the management’s cautious commentary about the slowing rural market.

“The management indicated about a slowdown in market growth led by rural, and the commentary did not indicate any pick-up,” said brokerage Emkay’s analysts in a note. “We believe that HUL may continue to outperform its peers given its better execution, but slow market growth may impact performance.”

The downgrades in target prices are also because of rich stock valuations, said analysts.

SBI Caps said the stock’s valuations at 48 times FY21 estimated price to earnings (P/E) ratio limits upside.

Brokers CLSA and Motilal Oswal expect the stock’s higher valuations to stay. “We believe premium valuations will likely sustain in the context of strong execution and focus on growth with margin expansion,” said CLSA.