HUL Share Price Declines After Q2 Profit Dip, Trim In Earnings Outlook

Hindustan Unilever Ltd.'s share price plunged over 5% in early trade to over three month low on Thursday after net profit in the September quarter declined and analysts trimmed future earnings projections.

The consolidated net profit of the company fell 2.3% year-on-year to Rs 2,595 crore in the quarter-ended Sept. 30, 2024. That compares with the Rs 2,693-crore consensus estimate of analysts tracked by Bloomberg. Revenue rose 2% to Rs 15,926 crore, better than the estimate of Rs 15,753 crore.

HUL, while logging an Ebitda margin of 23.8%, reported a 2% climb in underlying sales and a 3% increase in underlying volume growth in the September quarter.

Besides, the HUL management expects volume growth to surpass value growth in coming quarters, while it keeps focus on volume-led growth to drive competition. The company might take low-single digit price growth and sees recovery in rural demand moving ahead.

Analysts at Investec, Citi and Jefferies reduced their earnings projections for the company, on concerns over tapering urban demand, competition pressures in the personal care and food and refreshments categories and price hikes in the third quarter in segments like tea, palm oil and soaps.

Hindustan Unilever's share price fell as much as 5.6% intraday, the lowest level since July 8, before paring loss to trade 4.5% lower at Rs 2,539.5 per share as of 9:30 a.m. The benchmark NSE Nifty 50 was down 0.5%.

The stock has risen 1.15% in the last 12 months and fallen 5.6% on a year-to-date basis. Total traded volume so far in the day stood at 12 times its 30-day average. The relative strength index was at 44.

Twenty-four out of 43 analysts tracking HUL have a 'buy' rating on the stock, 14 recommend a 'hold' and five suggest a 'sell', according to Bloomberg data. The average of 12-month analysts' price target implies a potential upside of 13%.