Buy Hindustan Unilever; target of Rs 2755: Sharekhan

BUY

Sharekhan's research report on Hindustan Unilever

HUL’s Q3FY25 performance was in line with expectations, as revenues rose 1.4% y-o-y (volume growth flat y-o-y), OPM stayed stable at 23.2% and adjusted PAT was flat y-o-y. Demand remained subdued as urban growth continued to moderate, while rural sustained its gradual recovery. Management expects moderation in consumption trends to continue in the near term. OPM to remain at lower end of 23-24% for quarters ahead. Acquisition of Minimalist is a long-term positive and in line with HUL’s strategy to expand its product portfolio in high growth demand spaces. HUL will acquire 90.5% stake in the company for Rs. 2,955 crore (5.9x EV/annualised sales).

Outlook

Stock has corrected by 23% from its recent high and trades at 53x, 50x and 44x its FY25E, FY26E and FY27E EPS, respectively. We retain a Buy with a revised PT of Rs. 2,755.

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