HUL Q3: Most brokers stay cautious to bearish post earnings

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26 Aug, 2025 12:21

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Moneycontrol Bureau

Most brokerages have retained their neutral to bearish view on the Hindustan Unilever after the company’s third quarter earnings announced Monday fell short of estimates.

A snapshot of brokerage views on the stock post earnings:

Bank of America Merrill LynchRating: Neutral

A sharp 18% year-till-date run up in stock leaves limited upside to discounted cash flow based price objective. Earnings upgrades will be key for the stock performance

CLSARating: SellPrice target: Rs 650

Going ahead, lower input prices would drive up gross margins but realisation-led revenue growth would moderate; EBITDA margin expansion would also be modest due to product price cuts and higher advertising and promotional spends JP MorganRating: Equal weightPrice target: Rs 790

Volume growth is bottoming out and maintain our expectation of a volume recovery in FY16 aided by lower prices and an improvement in consumer sentiment. Price reinvestment would weigh on value growth, although benefits from accelerated premiumisation cannot be ruled out. Credit SuisseRating: OutperformPrice target: Rs 955

HUL has proactively taken price cuts of around 5% in soaps and detergents, a first for the company. However, we see this as an aggressive push for premiumisation as the company sees demand picking up.

CIMB Rating: ReduceTarget: Rs 800

HUL trades at 39.5 times/33.6 times FY16/FY17 price earning multiples, which seem rich given the earnings growth trajectory even in best case if we don’t see heightened competition in the key categories. We recommend that investors use the recent rally to sell the stock.

BarclaysRating: Equal weightTarget price: Rs 913

Trading at high valuations (1-year forward P/E at 35% premium to 10-year average), HUL required a volume/margin beat for further valuation rerating, in our view; thus, with near-term earnings likely to remain weak on muted volume growth, valuations are unlikely to rerate higher. 

Morgan StanleyRating: Equal weight

While headline results are weak, underlying trends are encouraging, in ourview. The stock is up 18% year-till-date, and the midcap stocks now trade at around 24% discount to HUL, with arguably higher leverage to falling input costs. With improving earnings visibility, we expect the valuation discount for the mid-caps to narrow. 

Deutsche SecuritiesRating: BuyPrice target: Rs 950

We continue to value HUL at 38 times Sep'16 earnings. We believe the higher multiple is sustainable due to: (1) HUL's market share gains in most categories, (2) likely acceleration in volume growth to 12% in FY2016 (estimated)