Why Hindustan Unilever shares fell 6% in intraday trade

Shares of Hindustan Unilever Ltd (HUL) continued losing streak for the fourth consecutive session on Monday, falling nearly 6 per cent in intraday trade on the Bombay Stock Exchange (BSE), after the fast-moving consumer goods (FMCG) major reported decline in its profitability and volumes during March quarter due to the COVID-19 pandemic.

Reacting to earnings numbers, HUL share price declined as much as 5.88 per cent to touch an intraday low of Rs 2,066.55 against previous closing price of Rs 2,195.70. Earlier in the day, the stock opened sharply lower at Rs 2,108. On the volume front, as many as 2.07 lakh shares changed hands over the counter as compared to two-week average volume of 1.06 lakh shares.  

In a similar fashion, HUL shares were trading 4.40 per cent lower at Rs 2,098.35 apiece on the National Stock Exchange. The stock hit an intraday low and high of Rs 2,160 and Rs 2,075, respectively.

In the last five trading sessions, HUL shares plunged 10.94 per cent from Rs 2,320.6 on April 27 to Rs 2,066.55 on May 4, as against nearly 1 per cent rise in the S&P BSE Sensex.

Also Read: HUL posts 1.4% rise in profit at Rs 39,136 crore in FY20

HUL, India's consumer goods company, on Thursday reported a net profit of Rs 1,519 crore for the fourth quarter ended 31 March, down 1.2 per cent year-on-year (YoY), while revenue from operations slipped 9.4 per cent to Rs 9,011 crore. Sale volume was down 7 per cent in Q4FY20, due to coronavirus outbreak and subsequent lockdown.

Commenting on financial performance, Sanjiv Mehta, chairman and managing director HUL, had said, "Covid-19 is perhaps the biggest challenge for us both from the lens of sustaining lives as well as livelihoods. The human impact of the pandemic is uncertain, and we are fully committed to working with the Government and our partners to ensure that we overcome this crisis together."

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For the full financial year ended March 31, 2020, HUL reported a 1.4 per cent rise in revenue at Rs 39,136 crore as against Rs 38,579 crore in the last fiscal.  The net profit was Rs 6,748 crore as against Rs 6,054 crore for last financial year.

India's largest consumer goods maker has also recommended a final dividend of Rs 14 for the financial year ended March, 2020 on equity shares of Re 1 each.

Despite disappointing Q4 earnings, most of the brokerages have maintained buy/hold rating on the stock, as they hope HUL to be key beneficiary of the rural demand recovery.