Hindustan Unilever Gains Attraction from Analysts, Target Priced at Rs 2700

Hindustan Unilever Validates Volume-Recovery Trend with Strong 6% y/y Growth

Hindustan Unilever (HUL) has reported a robust 6% year-over-year (y/y) volume growth in its latest research report, marking the best performance in 12 quarters and surpassing the street estimate of 4-5%. This significant growth is attributed to the GST rate cut and strategic measures implemented by the company's new CEO, Priya Nair. HUL's focus on competitive volume-led growth through sharper consumer segmentation, premiumisation, brand modernisation, and acceleration in digital and quick commerce has paid off, contributing to the company's impressive performance.

Notably, despite recent input cost pressure resulting from the West Asia conflict, the management has maintained its midterm EBITDA margin guidance band of 22.5-23.5%. Furthermore, HUL reiterates that the company's FY27 performance will be better than FY26. In light of the demerger of the ice-cream business and the impact of recent input cost pressure, our estimates for FY27/28e have been reduced by 4-7%. However, we remain optimistic about sustained demand recovery in the coming quarter, driven by HUL's diversified portfolio and brand investment in new-age and digital commerce.

Outlook and Recommendation

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We maintain a BUY rating on HUL with a revised 12-mth target price of Rs 2,700 (from Rs 2,910 earlier), valuing the stock at 50x FY28e EPS (vs. 53x Sep-27e EPS earlier). This revised target price reflects our adjusted estimates and expectations for the company's future performance.

Comparison of Estimates