Should you ‘Buy’ Hindustan Unilever post Q4 results?
Brokerage Phillip Capital maintained ‘Buy’ on HUL with a target price of Rs 2,450.
Brokerages retained their bullish view on Hindustan Unilever (HUL) even as the company reported a fall of 3.93 per cent in consolidated profit at Rs 1,512 crore for the fourth quarter, impacted by the coronavirus crisis from mid-March.
It had posted a net profit of Rs 1,574 crore in the corresponding quarter last year.
Sales during the quarter under review stood at Rs 9,055 crore, down 9.61 per cent from Rs 10,018 crore in the corresponding period a year ago. “The spread of Covid-19 impacted the business from mid-March, which culminated into scaling down of operations post the national lockdown. Reported EBITDA margin reduced by 40 bps," said HUL on Thursday.
“Volumes dipped 7 per cent YoY on a base of 7 per cent, clearly reflecting impact of lockdown and deceleration in discretionary spending. Without Covid too, HUL would have clocked around 3 per cent YoY revenue growth, lower than previous quarters (Q3FY20: 3.6 per cent YoY) owing to accentuating rural slowdown as well as sluggish macroeconomic environment,” Edelweiss Securities said while maintained ‘Buy’ call on HUL with a target price of Rs 2,550.
HUL's sales volume decline in the fourth quarter was the first since demonetisation in 2016.
However, going ahead the brokerage house remained confident of margin expansion trajectory owing to cost savings programs and building synergies from GSK acquisition.
Brokerage Phillip Capital also maintained ‘Buy’ on HUL with a target price of Rs 2,450.
“We believe HUL has right matrix to sail through such challenging times. We maintain high-conviction ‘Buy’. Integration related challenges for the GSK Consumer merger and consumer demand not picking even from 2HFY21 onwards are some of the key risks for HUL,” Phillip Capital said.
Shares of the company dropped nearly 5 per cent to Rs 2,091.
It had posted a net profit of Rs 1,574 crore in the corresponding quarter last year.
Sales during the quarter under review stood at Rs 9,055 crore, down 9.61 per cent from Rs 10,018 crore in the corresponding period a year ago. “The spread of Covid-19 impacted the business from mid-March, which culminated into scaling down of operations post the national lockdown. Reported EBITDA margin reduced by 40 bps," said HUL on Thursday.
“Volumes dipped 7 per cent YoY on a base of 7 per cent, clearly reflecting impact of lockdown and deceleration in discretionary spending. Without Covid too, HUL would have clocked around 3 per cent YoY revenue growth, lower than previous quarters (Q3FY20: 3.6 per cent YoY) owing to accentuating rural slowdown as well as sluggish macroeconomic environment,” Edelweiss Securities said while maintained ‘Buy’ call on HUL with a target price of Rs 2,550.
HUL's sales volume decline in the fourth quarter was the first since demonetisation in 2016.
However, going ahead the brokerage house remained confident of margin expansion trajectory owing to cost savings programs and building synergies from GSK acquisition.
Brokerage Phillip Capital also maintained ‘Buy’ on HUL with a target price of Rs 2,450.
“We believe HUL has right matrix to sail through such challenging times. We maintain high-conviction ‘Buy’. Integration related challenges for the GSK Consumer merger and consumer demand not picking even from 2HFY21 onwards are some of the key risks for HUL,” Phillip Capital said.
Shares of the company dropped nearly 5 per cent to Rs 2,091.