HUL Share Price Falls 4% Despite Strong Q1 Earnings

Shares in HUL or Hindustan Unilever fell nearly 4 per cent on Tuesday, a day after the FMCG major reported strong quarterly earnings. HUL shares opened nearly 1 per cent lower at Rs 1,770 on the BSE, and dipped to as much as Rs 1,685.05 at the day's lowest point. On the broader NSE, HUL shares fell 3.9 per cent to hit an intraday low of Rs 1,683.25. At 1:00 pm, HUL shares were trading more than 3 per cent lower on both the bourses. HUL was also the top laggard on benchmark indices Sensex and Nifty. 

HUL registered a 19 per cent year-on-year rise in net profit at Rs 1,529 crore in the quarter ended June, according to a regulatory filing post-market hours on Monday. The company had reported a net profit of Rs 1,283 crore for the corresponding period a year ago. Total sales grew 3 per cent to Rs 9,356 crore during the quarter, compared with Rs 9,094 crore in the year-ago period.

Analysts said the quarterly performance of HUL was in line with their estimates.

"HUL has been enjoying a favorable base along with market share gains in the last 4 quarters. However, the base will be higher in the coming quarters. This may lead to relatively slower growth performance… Input inflation is high but co has enough levers to pass-on to consumer," said HDFC Securities.

The brokerage sees limited upside in HUL shares from the current juncture. It recently downgraded HUL to 'neutral' with a target price of Rs 1,709.

Going forward, brokerage Edelweiss expects HUL to be a key beneficiary of "an anticipated rural recovery and herbal push". Edelweiss recommends ‘hold’ with a revised target price of Rs 1,887.

HUL shares traded with large volumes. By afternoon, nearly 2.2 lakh HUL shares had changed hands, compared with a two-week average of 64,000.