Hindustan Unilever hits 52-week high; trades higher for 7th straight day

Shares of Hindustan Unilever (HUL) hit a new 52-week high of Rs 2,549.50 on the BSE in the intra-day trade on Friday as investors turned to defensive stocks from the FMCG space in a weak market. The stock of the fast moving consumer goods (FMCG) company was trading higher for the seventh straight day. In comparison, the S&P BSE Sensex was down 0.67 per cent at 55,251 points at 10:40 am.

The stock surpassed its previous high of Rs 2,531.50, touched on June 22, 2021, and was trading at its highest level since April 2020. It had hit an all-time high of Rs 2,614 on April 8, 2020.

In the past seven trading days, the stock of HUL has rallied 7 per cent as compared to a 1.5 per cent rise in the S&P BSE Sensex and a 2.8 per cent gain in the S&P BSE FMCG index.

For April-June 2021 quarter (Q1FY22), HUL's health, hygiene and nutrition portfolio sustained healthy growth (8 per cent YoY), with its mix increasing to 85 per cent, from 80 per cent. Besides, market share gains continued, well supported by strong rural and sustained momentum in e-commerce (the most profitable channel for HUL). The nutrition portfolio also saw Go To Market (GTM) integration (50 per cent completed) and clocked mid-single digit volume growth (gaining penetration sequentially).

Going-forward, analysts expect HUL to deliver sustained recovery in the discretionary portfolio and accelerate growth in the nutrition portfolio.

“The company saw market share gain across all three segments, including its premium products. The e-commerce business has now doubled, with around 10 per cent of the company's business being driven by digital platforms.  Acquired business (GSK) synergy is being reinvested, as of now, with further scope for margin improvement. We expect current Ebitda margin to sustain for FY22. GTM integration for nutrition business (GSK) reached 50 per cent, and management expects it to reach 80-90 per cent by September end. A more than 80 per cent business is gaining penetration,” analysts at HDFC Securities said in a result update.

Those at Motilal Oswal Financial Services believe HUL's outlook, from a medium-term perspective, remains positive. "Growth in earnings has gained further momentum in recent years (18 per cent EPS CAGR in the four years ended FY20 v/s 12 per cent CAGR over the 10 years ended FY20). Despite a highly disruptive year, HUL posted an EPS growth of 11.5 per cent in FY21. This is particularly impressive given the weak mid-single-digit earnings growth posted by (much smaller) peers in recent years," they said.