Hindustan Unilever shares fall 4% as royalty hike shadows good Q3 numbers

Hindustan Unilever Ltd (HUL) shares fell on Friday amid concerns over an increase in royalty and central services arrangement fees to its parent, the Unilever group. The HUL stock declined by Rs 101.9 or 3.8 per cent to end at Rs 2,548.4 apiece on BSE, a day after the FMCG major reported a set of financial results that exceeded analysts' expectations.

Hindustan Unilever shares were the top laggard in the Sensex and Nifty baskets.

After market hours on Thursday, Hindustan Unilever reported a 7.9 per cent increase in consolidated net profit to Rs 2,481 crore for the October-December period compared with the corresponding period a year ago. Its quarterly revenue grew 16.4 per cent on a year-on-year basis to Rs 15,707 crore, according to a regulatory filing.

The company's board said it had approved a new arrangement with Unilever Group that would see an increase in the royalty and central services fees to 3.45 per cent of turnover, from 2.65 per cent in the year ended March 2022.

Click here for latest updates on the stock market | Zee Business Live

"HUL's December quarter report was broadly on expected lines but the Street for now is more focused on estimating the damage that occasional tinkering of royalty rates could do to the intrinsic value of the stock," according to JM Financial Institutional Securities.

HUL shares have grown more than 14 per cent in value in the past one year, a period in which the Nifty50 benchmark has risen 1.9 per cent. 

ALSO READ: Budget 2023: How does India earn? What is the math behind it?