Why HUL Is The Only Gainer Among FMCG Peers So Far This Year
HUL’s stock is up 5.5% so far this year compared with a 20.5% slide in Nifty FMCG Index and a 36% drop in Nifty 50.
India’s largest consumer goods maker is the only one among peers that is still trading higher year-to-date even as the coronavirus pandemic stalled businesses big and small.
Shares of Hindustan Unilever Ltd. are up 5.5 percent so far this year compared with a 20.5 percent slide in the Nifty FMCG Index and a 36 percent drop in the benchmark Nifty 50.
That’s primarily because the company makes essential goods—from staples to soaps.
Stocking goods for future use owing to Covid-19 outbreak-led uncertainty and cost cutting measures will aid HUL’s earnings, Investec, which has a ‘Buy’ rating on the company, said.
Also Read: Consumer Goods Makers Cut Or Hold Prices Amid Coronavirus Outbreak
Edelweiss, which also suggests ‘Buy’, said HUL was a key beneficiary of rural demand recovery and herbal push. Volume growth is likely to sustain on the back of its market leadership, strong distribution network and use of analytics.
Also Read: Statewide Lockdowns Disrupt Supply Of Grocery, Consumer Goods
Analysts still see an upside of 12 percent from Tuesday’s close for HUL, according to the average of estimates tracked by Bloomberg. Nearly 70 percent (of the 30 analysts) recommend ‘Buy’ and only 5 percent suggest ‘Sell’. The rest have a ‘Hold’ rating.
