Shares of Hindustan Unilever witnessed profit taking today on concerns over volume growth in the third quarter and expensive valuations.
Volume growth at four per cent was a tad lower than five per cent in the September quarter. Analysts, who had estimated four-five per cent volume growth, said this figure had to pick up for the Street to get positive on HUL, which could take some time.
Valuations are ahead of its historical average one-year forward price/earnings ratio of 28 times, suggesting limited upside.
"While the company continues to grow ahead of industry, volume growth has come in at only 4% - indicative of the demand pressures faced by the industry, EBITDA growth, post commendable cost management, is limited to 13%. Given this context, and our assumption that consumption trends are unlikely to change significantly in the near future, we find HUL's valuations aggressive," Kotak Securities said in a note.
Ove 1.4 million shares were traded on both the stock exchanges so far.
