Most Brokerages Remain Bullish On HUL After Q3 Results, But Stock Falls
Various products made by Hindustan Unilever Ltd., including Lux soap, Surf Excel detergent and Dove Shampoo, sit for sale on a store shelf in Mumbai, India. (Photographer: Prashanth Vishwanathan/Bloomberg News)

Most Brokerages Remain Bullish On HUL After Q3 Results, But Stock Falls

Most analysts maintained their bullish investment recommendations for Hindustan Unilever Ltd. hoping that volumes and discretionary portfolio of the nation’s largest consumer goods maker will recover as disruptions caused by the Covid-19 pandemic wane. Yet, the stock fell the most since September.

Volume growth of the maker of Lux and Dove soaps during the three months ended December stood at 4%, excluding its acquisition of Horlicks. The comparable volumes remained flat in the preceding three months and contracted for two straight quarters prior to that.

The volume growth signals a recovery during the festival season as India continued to reopen the economy after imposing one of the world's harshest Covid-19 lockdowns.

Net profit of HUL rose 18.8% over the year earlier to Rs 1,921 crore in the reported quarter. Its revenue and operating income also increased.

According to Jefferies, HUL’s management intends to prioritise growth over margins, but the company may increase prices due to rising raw material costs.

Dolat Capital maintained its ‘reduce’ rating on the stock, considering a limited room for further upside following a recent run-up. “However, fundamentally, we see high growth prospects for HUL,” the brokerage said in a note.

Shares of HUL fell as much as 3.3% in afternoon trade on Thursday to Rs 2,312.55 apiece, down for the third straight session. Of the 41 analysts tracking the company, 34 have a ‘buy’ rating, four suggest a ‘hold’ and three recommend a ‘sell’. The average of Bloomberg consensus 12-month price targets implies an upside of 13.8%.

Also read: HUL Q3 Results: Profit Rises 19%, Volume Growth At 4% As Demand Picks Up

Here’s what brokerages have to say about HUL’s third-quarter results…


  • Maintains ‘buy’ with a target price of Rs 2,780 apiece
  • Pick-up in personal care was a positive, while muted trend in laundry a disappointment
  • Laundry segment disappoints as home care portfolio declined 2% year-on-year
  • Beauty and personal care staged a strong recovery compared to Q2
  • The company is focussed on growth over margins

Motilal Oswal

  • Maintains ‘buy’ with a target price of Rs 2,690 apiece
  • The high-margin discretionary portfolio is likely to recover and report growth from 4Q FY21
  • Recovery is also imminent in the highly profitable detergents portfolio
  • Rural continues to lead growth
  • Horlicks and Boost have both reported double-digit sales growth within just three quarters since the merger

ICICI Direct

  • Reduces from ‘buy’ to ‘hold’ with a target of Rs 2,600 a share
  • HUL reported moderate volume growth compared to peers
  • Net sales grew 20.5% mainly on account of consolidation of acquired businesses
  • Cost increase would restrict operating margin expansion
  • Synergetic benefits of acquired nutrition brands would reflect in margin expansion going forward

Edelweiss Research

  • Maintains ‘buy’ with a price target of Rs 2,805 apiece
  • HUL to be key beneficiary of the rural demand recovery
  • In terms of Covid-19-related impact, the worst is behind
  • Expects volumes and earnings to improve sequentially
  • Expects premiumisation to sustain

Also read: Phatak Elevated To Global Role At Unilever, Ritesh Tiwari Named HUL CFO

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