HUL share price falls 2% despite matching analysts’ expectations for Q4 financial performance; should you buy HUL stock?

Shares of Hindustan Unilever Ltd. decreased today after the company released its Q4FY23 earnings. The price of HUL stock has dropped almost 2% during the past month, but it has increased 15% over the past year.

Even though Hindustan Unilever Ltd (HUL)’s fourth quarter financial results met analysts’ expectations, the company’s share price fell 2.1% to Rs 2,467.6 today. The company said that its net profit increased by 8.6% year over year to Rs 2,561 crore and that revenue increased by 10.5% to Rs 15,215 crore. HUL also approved a final dividend of Rs 22 on equity shares of Re 1 per share for the fiscal year that ended in March 2023.

The price of HUL stock has dropped almost 2% during the past month, but it has increased 15% over the past year. The market value of the company is Rs 5.8 lakh crore at the current share price of Rs 2469.6. On 9 December 2022, the shares reached a 52-week high of Rs 2,741.6, and on 17 June 2022, a 52-week low of Rs 2,100.

“Going forward, the operational environment is probably going to stay unstable. Price and volume growths will rebalance as inflation eases as a result of the high base eroding and sequential softness in a few commodities. As consumption patterns shift, market volumes will progressively increase, according to Sanjiv Mehta, CEO and Managing Director of HUL.

HUL’s total performance fell short of Street expectations.

“In my opinion, you will start to notice an improvement in the trajectory of the margins from the first quarter, and it will be obvious that the rural slowdown that we had previously mentioned has an influence on the portfolio of HUL. Overall results are therefore slightly below street expectations, but they are relatively close to our expectations, according to Abneesh Roy of Nuvama Institutional Equities in a TV interview.

Currently, analysts suggest to steer clear of HUL shares.

“I wouldn’t want to invest in a HUL at the current levels because another correction might be coming. It has been underperforming the FMCG pack for some time, therefore it is obviously something to avoid right now, according to Aditya Agarwala of Invest4edu in a TV interview.

“The degree of improvement is less than we anticipated. We think the corporation is actively increasing grammage or cutting costs to pass along the benefit of cheap commodity prices in order to boost volume. The experts from ICICI Direct Research stated, “We believe sales of discretionary categories in BPC & malt beverage brands in the foods segment continue to remain under pressure.” The brokerage expects HUL’s volume growth to remain in the mid-single digits in FY24, with low pricing growth. It is still concerned about the prognosis for growth, as well as the potential for margin improvement in the face of intense competition.

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