Jefferies says that the company will benefit from increased rural consumption. The surprising results of the Lok Sabha elections will bring about a change in the government’s policy. The FMCG sector will benefit due to this change.
New Delhi. Hindustan Unilever (HUL) stock not only stood firm even in the tsunami of recession that came on the day of the Lok Sabha election results. The next day i.e. on June 5, the stock jumped up to 9 percent in intraday and then it closed at Rs 2602.90 on BSE with a gain of 4.27 percent. Foreign brokerage firm Jefferies is bullish on this stock after the results of the 2024 Lok Sabha elections and has advised investors to buy this stock. The special thing is that HUL stock has been sluggish for a long time and in a year this stock has caused a loss of about 6 percent to the investors. Today i.e. on Thursday, HUL stock is trading at Rs 2535.05 with a decline of 2.60 percent on NSE.
Global brokerage firm Jefferies expects HUL to start recovering from its performance against the Nifty 50 over the past three and five years. “HUL has underperformed the Nifty as it has faced significant challenges in growth and margins over the past few years,” the brokerage said. Jefferies further said that the surprising results of the Lok Sabha elections have given it confidence that the government will adopt more favourable policies towards consumption, especially rural and lower income (BOP) consumers.
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The price can go up to Rs 2950
Jefferies has upgraded HUL to a ‘Buy’ rating. The brokerage has also increased its target price from Rs 2530 to Rs 2950. Jefferies says that some companies are pointing to expected growth in rural areas, which is a good sign for the market. The brokerage expects HUL’s growth to increase in FY 2025. Jefferies has increased its earnings per share (EPS) estimates by 1-3%.
Quarterly results as expected
During the last quarter of FY 2024 i.e. January-March period, HUL earned a net profit of ₹ 2,406 crore. The company’s revenue also remained as per expectations in the quarter. The company’s EBITDA stood at ₹ 3435 crore, which was in line with the expectations of ₹ 3430 crore. EBITDA margin stood at 23.1%. The company management is optimistic about the increase in growth due to better monsoon and improving macroeconomic conditions.
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first published : June 6, 2024, 10:17 IST
