Buy Hindustan Unilever; target of Rs 3079: Sharekhan

Buy

Sharekhan's research report on Hindustan Unilever

HUL’s Q2FY2025 performance was slight miss on expectations with revenues growing by 1.5% y-o-y while PAT declined by ~4% y-o-y; underlying volumes grew by 3%, lagging street expectations of 4-5%. Rural demand is recovering, while urban demand is moderating resulting in no major uplift in the overall demand. Management expects low-single digit price-led growth in H2FY2025 due to input cost inflation. OPM to remain at ~23% in the near term. Board has decided to separate ice cream business to sharpen focus on core business. Ice cream business contributes ~3% of overall India business and this move is unlikely to have any impact on HUL’s earnings performance.

Outlook

Stock has corrected by 13% from its recent high and trades at 59x, 54x and 49x its FY25E, FY26E and FY27E EPS, respectively. We retain a Buy on the stock with a revised PT of Rs. 3,079.

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Hindustan Unilever - 24102024 - khan