Hindustan Unilever Ltd. (HUL) experienced a significant stock price decline following the release of its quarterly results, despite major brokerages maintaining a positive outlook on the company. The market's reaction to HUL's performance presents an interesting contrast between stock movement and analyst recommendations.

Stock Performance

HUL's shares saw a sharp decline during trading:

Brokerage Ratings and Target Prices

Despite the stock's decline, major brokerages maintained a positive stance on HUL:

Analyst Consensus

The overall analyst sentiment remains largely positive:

Quarterly Results Impact

The company's quarterly performance was affected by several factors:

• Trade destocking across the supply chain
• Distributors delayed purchases in anticipation of GST rate cuts
• Resulted in a 200 basis points drag on growth
• Impact expected to continue into the next quarter

The market's reaction to HUL's quarterly results highlights the complex interplay between financial performance, market expectations, and external factors such as regulatory changes. While the immediate stock price reaction was negative, the maintained positive outlook from major brokerages suggests confidence in the company's long-term prospects.

Investors and market watchers will likely keep a close eye on how HUL navigates the challenges posed by trade destocking and potential GST rate changes in the coming quarters.

Hindustan Unilever Limited (HUL), a leading FMCG giant in India, has revised its EBITDA margin forecast upwards and expressed optimism about its future performance. The company has increased its EBITDA margin forecast to 23%-24%, up from the previous guidance of 22%-23%, representing an upward revision of approximately 1 percentage point at the midpoint of the guidance range. Additionally, HUL anticipates that the second half may deliver better results compared to the first half, signaling potential growth and improved market conditions.

Performance Overview

HUL reported a consolidated Underlying Sales Growth (USG) of 2% for the quarter, with a flat Underlying Volume Growth (UVG). The company's performance during this period was influenced by transitory impacts of GST changes and prolonged monsoon conditions in parts of the country.

Financial Highlights

The company's EBITDA margin declined by 90 basis points year-on-year, primarily due to higher investments in the business. Despite this, Profit After Tax grew by 3.80%, driven by a one-off positive impact from the resolution of prior years' tax matters between UK and Indian tax authorities.

Segment Performance

• Home Care: Delivered mid-single digit UVG, offset by price reductions taken in previous quarters.
• Beauty & Wellbeing: Achieved 5% USG, driven by Skin Care and Health & Wellbeing segments.
• Personal Care: Turnover growth was flat, impacted by GST rate transition.
• Foods: Reported 3% USG with low-single digit UVG, supported by double-digit growth in Beverages.

Future Outlook

Priya Nair, CEO and Managing Director of HUL, commented on the company's future strategy: "We are determined to accelerate our portfolio transformation by radically sharpening our consumer segmentation, being bolder in transforming our core brands to make them more modern, desirable and youthful, future-proofing our marketing & sales capabilities by enabling superior online brand discovery & fulfillment and investing disproportionately to scale our high-growth demand spaces."

The company believes that these key priorities, coupled with a supportive macroeconomic environment, may position HUL to accelerate volume-led growth in the mid-to-long term.

Dividend Announcement

The Board of Directors has declared an interim dividend of ₹19.00 per equity share. The record date for determining shareholder eligibility is set for November 7, with the dividend payment scheduled for November 20.

As HUL navigates through the challenges of GST reforms and changing market dynamics, the company's optimistic outlook for the second half and the upward revision of its EBITDA margin forecast suggest a potential rebound in performance. Investors and market watchers will be keenly observing how HUL's strategies unfold in the coming months to drive growth and maintain its market leadership in the competitive FMCG sector.