HUL Stock Falls on Earnings Miss; Analysts Divided Over Outlook

Hindustan Unilever Ltd. continued to fall for the second straight session, on the back of revenue and volume growth performance that missed analysts estimates. The stock fell as much as 2.9 percent to Rs 894.35, after Monday’s 2.1 percent fall.

Broking firms are divided on HUL’s earnings and the outlook for the stock. Here’s a snapshot of what Goldman Sachs, Morgan Stanley, BNP Paribas Equity Research and Citi Research had to say in their notes to clients.

Goldman Sachs

• Maintained ‘neutral’ rating.
  
• Cut target price to Rs 665 from Rs 695.
• Cut FY17-19 earnings before interest and taxes forecast by 1 percent to 6 percent to reflect slower volume growth.
• Cut earnings per share estimates by 1 percent to 4 percent. Cited tax benefits for smaller cut.

(Goldman Sachs has the lowest price target for HUL among 43 analysts tracked by Bloomberg).

Morgan Stanley

• Maintained ‘overweight/attractive’ rating.
• Cited high visibility for operating margin expansion even in an inflationary environment.
  
• Target price maintained at Rs 945/share.
  
• Disappointed by volume trend.

BNP Paribas Equity Research

• Maintained ‘buy’ rating, said HUL best proxy for rural recovery.
  
• Raised target price by 3 percent to Rs 1,020.

• Cut FY17 revenue and EPS estimates by 1.7 percen each due to muted demand outlook in first half of the fiscal year.
  
• Maintained FY18 and FY19 estimates citing good monsoon and improving medium-term outlook.

Citi Research

• Maintained ‘sell’ rating, said growth remains elusive.
  
• Raised target price to Rs 830 from Rs 825.

Also Read: Hindustan Unilever Reports Subdued Volume Growth Even as Profit Rises 10%