Shares of Hindustan Unilever Ltd (HUL) hit a record high on Tuesday, a day after the country’s largest consumer goods maker’s April-June quarter earnings beat street expectations by a wide margin.
HUL shares surged to an all-time high of Rs477.60 on the Bombay Stock Exchange (BSE). The stock ended up 7.49 per cent, or Rs33.15, at Rs476. It was the top gainer in the 30-stock Sensex.
CLSA upgraded its target price on the stock to Rs485 while retaining its “overweight” rating. The brokerage called the earnings “a strong all-around performance” that showed growth across volume, earnings before interest, tax, depreciation and amortisation (Ebitda) and margins.
Morgan Stanley said the results reflected “strong” volume growth and “even stronger pricing”, adding HUL’s earnings validate its call that large consumer companies are gaining volume market share at the expense of regional players.
Nikhil Vora, managing director (institutional equities research), IDFC Securities, issued a more cautionary note, saying the foods business remains a concern, as does HUL’s organisational structure.
“Inability to aggressively grow the foods business (Unilever overhang) remains a concern”, Vora wrote in a note to clients. “For the market out performance to continue over a longer period, HUL needs to get ‘leaner’ in terms of organisational structure as well as extend its footprint to larger and more relevant categories,” he added.