Here’s why Hindustan Unilever shares fell today

Hindustan Unilever in focus: Shares of Hindustan Unilever Limited (HUL) witnessed a decline of over 1.50 per cent to hit an intraday low of Rs 2,614.80 per share. The drop came after the fast-moving consumer goods (FMCG) manufacturer said it has received Goods and Services Tax (GST) demands and penalties worth Rs 447.5 crore.

HUL revealed through an exchange filing that it received five tax orders from different GST officials across various zones on December 30, 2023, and December 31, 2023. 

These orders include a tax amount of Rs 372.82 crore and a penalty of Rs 39.90 crore related to salaries and allowances paid to expatriates, issued by the Joint Commissioner, CGST, and Central Excise, Mumbai East. Additionally, other tax demands and penalties have been imposed by authorities in Bengaluru, Haryana, and Kochi.

Despite the tax demand, HUL assured stakeholders that these GST demands and penalties would not materially impact its financials or operational activities. 

The company stressed that the orders are currently appealable, and it intends to assess and exercise its right to appeal.

Financial performance

Fast-moving consumer goods (FMCG) major Hindustan Unilever Ltd (HUL) standalone net profit jumped 4 per cent annually to Rs 2,717 crore, from Rs 2,616 crore in the year-ago period.  Sequentially, the net profit zoomed 10 per cent. 

The total revenue from operations jumped 3.6 per cent to Rs 15,276 crore, from Rs 14,751 crore in the same quarter previous fiscal.

Its earnings before interest, taxes, depreciation, and amortisation (EBITDA) climbed 9 per cent annually to Rs 3,694 crore. The company’s EBITDA margin for the quarter ended September, came in at 24.6 per cent, up by 130 basis points on year.

"We delivered a resilient and competitive growth whilst stepping up our EBITDA margin in a challenging operating environment, marked by subdued rural demand and heightened competitive intensity. Looking forward we remain cautiously optimistic,” said Rohit Jawa, CEO and Managing Director of HUL in an exchange filing.

Home care segment jumped 3 per cent with mid-single digit underlying volume growth (UVG), beauty and personal care by 4 per cent with mid-single digit UVG, and food and refreshment by 4 per cent. Household care volumes surged in high single digit led by Dishwash. 

“At the same time, we need to be watchful of volatile global commodity prices as well as the impact of monsoon on crop output and reservoir levels. In this context, our focus is to provide superior value to our consumers, drive competitive volume growth, and invest behind our brands," Jawa added.

The company also declared an interim dividend of Rs 18 per equity share of face value of Rs 1 each for the financial year ending March 31, 2024. 

Stock performance 

In 2023, HUL shares zoomed 17.42 per cent, while being outperformed by S&P BSE Fast Moving Consumer Goods, which rose 27.52 per cent during the same period.

In the last 5 years, the shares have zoomed 47.19 per cent. Meanwhile, the stock’s 52 week high is Rs 2,768.50 while its 52-week low is Rs 2,393.

The market valuation of HUL is Rs 6.16 lakh crore, according to BSE. According to media reports, Hindustan Unilever Ltd (HUL) recorded an increase in market share across more than 75 per cent of its businesses in FY23 in value and volume terms. 

The FMCG giant competes with ITC, Dabur and Godrej Consumer Products among others in this segment.

As of 1:48 pm, shares of HUL were trading 1.40 per cent lower at Rs 2,618.45 per share, according to BSE.