But, the trade situation improving gradually with wholesale channel now stabilizing, it added.
The stock has fallen 7.5% from its record high of Rs 1,286 touched on September 19, 2017. On comparison, the S&P BSE Sensex was down 3% during the same period.
“HUL management suggests no significant recovery in consumer demand; however, 9% sales growth, coupled with benign input cost and cost-saving initiatives would translate into 19% Ebitda/net profit growth each this quarter,” analysts at IIFL Institutional Research said in a note.
The company has not called out any revival in consumer demand and given the low base in volume and CSD (Canteen Stores Department) down stocking last quarter, the volume is a lackluster number. Analysts forecast 4-5% volume growth and 9% sales growth for HUL this quarter.
Analyst at HDFC Securities remains constructive on HUL, and expects healthy 12% revenue CAGR (compounded annual growth rate) over FY17-20, higher than 8% in the last five years.
“We are encouraged by a steady buoyant underlying demand at the consumer level. Restocking benefits should reflect in an improved 2QFY18 performance. Channel inventory is still low as compared to historical levels. HUL’s high valuation is natural, considering consistent market share gain with margin expansion and strong RoCE,” the brokerage firm said in recent report.
In past six months, the stock had outperformed the market by surging 56% against 23% rise in the S&P BSE Sensex till Monday, September 25, 2017.
At 12:20 PM; the stock was trading 1.7% lower at Rs 1,197 on BSE as compared to 0.59% decline in benchmark index. The trading volumes on the counter more than doubled with a combined 1.44 million shares changed hands on BSE and NSE.