Accumulate Hindustan Unilever; target of Rs 2686: Prabhudas Lilladher

Prabhudas Lilladher's research report on Hindustan Unilever

We cut FY26/FY27EPS by 1.1/4.5% factoring in 1) 18% decline in financial other income over FY25-27 due to lower cash surplus and interest rates 2) impact of ice cream business from FY27 and 3) and lower sales growth due to price cuts in homecare and tepid sales in Horlicks. HUVR is adopting aggressive strategy to accelerate growth by 1) price cuts and new launches in laundry portfolio 2) re-launch of Boost and plans to significantly re-launch Horlicks to arrest sales decline 3) sustained investments behind Future Core & Market Makers, part of portfolio which are growing in double digits. HUVR is making a big push in premium segments in Beauty and wellbeing to regain lost ground by B2C acquisitions and new launches and brand extensions, which should start showing impact by end of 1H26. Recent acquisitions are on track as OZiva sales are 3x in 1 year while Minimalist sales have grown in double digits since acquisition.

Outlook

We expect volume/sales and margins to inch up gradually in coming quarters with expected PAT growth exit of FY26 in high single digits. We expect 5.6% Sales CAGR and 4% EPS CAGR over FY25-27. We assign DCF based target price of Rs2686 (Rs2601 earlier) as we roll forward to Jun’27, implying target PE of 55.6x JuneFY27 EPS. Retain Accumulate.

For all recommendations report, click here