Shares of FMCG major Hindustan Unilever Ltd (HUL) today soared over 4 percent to touch a 52-week high after the company posted 20.63 percent increase in net profit for the fourth quarter ended December 31, 2012.
Buoyed by the results, shares of the company shot up 4.21 percent to a 52-week high of Rs 433.90 on the BSE.At the NSE too, the FMCG major gained 3.87 percent to
touch a one year high of Rs 433.80. The scrip was the top performer among the blue-chips on both the key indices Sensex and Nifty during the morning trade.
HUL yesterday posted 20.63 percent increase in net profit at Rs 686.61 crore for the fourth quarter ended December 31, 2012, on back of robust sales growth across all business verticals. The company had posted net profit of Rs 569.18 crore in the same period of 2010-11.
As a Business Standard report said Harish Manwani, HUL’s chairman and COO, Unilever, calls it the “and-and” strategy, which is delivering product innovation, cost efficiency and profitable growth — both in the short term and long term — simultaneously.
Brokerage firm CLSA also upgraded the stock to “outperform” from “sell” and raised its target price to Rs 465 from Rs 370 earlier. CLSA cited Hindustan’s “strong” operating performance in the last quarter and expectations of continued “strong” growth momentum.
Brokerage firm Espirito Santo also has a buy rating on the stock due to the company’s stellar performance. In an interview with CNBC-TV18, he said ,” I am quite excited to see these numbers and will definitely revise my numbers from these levels,” he said, adding that he prefers HUL to ITC, where he has a sell rating.
Even Edelweiss Securities has a buy rating on the stock as HUL continued its dream run in the fourth quarter, driven by volumes in the domestic business.
Kotak Institutional Equities also upgraded HUL to “add” from “reduce” on the back of “good volume growth momentum, benefits of distribution expansion likely to trickle down in FY2013, new launches likely to act as tailwind and likely reduction in competitive intensity in personal products, as evinced by lower GRP spends.”
However, Goldman Sachs retains a ‘Sell’ rating, revising the target price to Rs 309 from Rs 304 earlier as the margins for for beverages and foods division remained lackluster. The brokerage said sustained cost pressure through high crude and palm prices, as well as a depreciating rupee, could remain challenging for the company in the medium term.
Citi too maintains a ‘Sell’ rating with a revised target price of Rs 373 from Rs 345 earlier. However, the brokerage firm does not expect a meaningful margin expansion over FY13, given ad spends have already been slashed aggressively and rising input costs / weaker currency will continue to weigh upon GMs.
Even though most analysts have said the company’s slow growth in beverages and processed foods has been disappointing, experts at HSBC, are “overweight” on HUL. “This quarter was the ninth straight quarter of high single/double digit volume growth and fifth consecutive quarter of double-digit earnings growth, a testimony of HUL’s strategic success,” they told CNBC-TV18.