Sachets of Hindustan Unilever Ltd. Dove shampoo, from right, and Comfort laundry softener are displayed for sale at a store in Mumbai, India (Photographer: Kuni Takahashi/Bloomberg)

HUL Hits Lifetime High As Brokerages Say Worst Of Volume Growth Over

Shares of Hindustan Unilever Ltd. rose as much as 2.6 percent to a lifetime high of Rs 1,543 apiece after reporting strong sales volume growth in the fourth quarter of last year.

Most brokerages raised their target price on the stock, citing the “worst is over” for India’s largest fast-moving consumer goods company. The soap to soup maker clocked a 11 percent sales volume growth, it said in an exchange notification. This was considerably more than the Bloomberg consensus estimate of 5-6 percent.

The strong volume growth was driven by the home and personal care segments and can be attributed partly to a rise in rural demand, the management said at the earnings press conference, adding that it overtook urban demand in some pockets.

We find it encouraging that growth picked up despite there being no favourable base effect and no channel filling by the company.
Nomura Note

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Here’s what the brokerages had to say on HUL:


  • Maintains ‘Outperform’, raised target price to Rs 1,650 with a potential upside of 9.8 percent.
  • HUL’s 11 percent volume growth is ‘best in class’.
  • Management commentary is fairly positive, with a decisive pick-up in rural growth.
  • Rural demand has improved but need to wait a few more quarters to establish the trend.

Credit Suisse

  • Maintains ‘Outperform’, raised target price to Rs 1,675 with a potential upside of 11.4 percent.
  • Strong pick-up in volume growth trend; margins expand despite a jump in advertising spend.
  • Volume growth at 11 percent marks a significant acceleration in trend on a base of 4 percent.
  • Management still looks to expand operating margins in 2018-19 despite crude-driven inflation

Also read: Why India’s Consumer Firms’ Fortunes Are Tied To This Non-Profit Retailer

Morgan Stanley

  • Maintains ‘Underweight’ and raised target price to Rs 1,260 with a potential downside of 16 percent.
  • Fourth quarter suggests worst in terms of volume growth for the industry may be over.
  • Estimates around 9 percent volume growth in 2018-19
  • HUL stock trades at 30 percent premium to last 12-year average price-to-earnings ratio.


  • Maintains ‘Neutral’ with target price raised to Rs 1,430 and having a potential downside of 4.8 percent.
  • Fourth quarter earnings were supported by the domestic volume growth of 11 percent, beating their estimate of 9 percent.
  • Qualitatively growth has been better-than-expected as there has been no channel filling and no favourable base effect.
  • Continued Ebitda margin expansion is positive and has enabled the company to step up advertising spending.
  • Recommends investors to watch for a full recovery in rural demand, critical to maintain the current growth trajectory.
  • Raised current financial year’s earnings estimate by 2.8 percent to reflect the strong demand recovery.
  • Expects revenue growth of around 6 percent in the current financial year and nearly 14 percent for the next.
  • Likes HUL’s broad product portfolio as it will be a key beneficiary of any uptick in consumption.


  • Maintains ‘Buy’ with a target price of Rs 1,680 and a potential upside of 11.7 percent.
  • Volume growth signifies a pick up in demand but is also a function of GST-led benefits passed on to consumers, aiding volumes.
  • Recovery in consumption is seen across the board.
  • Marginally increase in Ebitda estimates by 2 percent.
  • Key downside risk: Irrational competition leading to price war and margin erosion.

A total of 29 analysts have a ‘Buy’ rating on the stock, 10 recommend ‘Hold’, rest have a ‘Sell’ rating.

Also read: HUL Offers To Set Aside Rs 119 Crore For Consumer Safeguard Fund