Prabhudas Lilladher's research report on Hindustan Unilever
HUL sales remained impacted due to transitory effect of GST 2.0 and prolonged monsoon, however flat 2Q volumes and 2% GST impact do not show any recovery from 1Q standalone volume growth of 3%. However, company remains confident and expects gradual pick up in volumes from Nov25 as the new stock enters the trade gradually. HUL’s new CEO highlighted focus on competitive growth driven by 1) focus on consumer segmentation by transforming core brands into more modern and youthful brands 2) sustained investments behind Future Core & Market Makers, which are growing in double digits 3) Superior product innovations and relaunches with focus on premiumization and 4) taking fewer and bigger bets. We believe HUVR is making a big push in premium segments especially in Beauty and wellbeing by leading category development and to regain lost ground by B2C acquisitions and new launches/brand extensions.
Outlook
We expect 6.9% Sales CAGR and 8.3% EPS CAGR over FY26-28 (post ice cream demerger). We assign DCF based target price of Rs 2772
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