On Thursday, October 24, the share price of Hindustan Unilever (HUL) fell more than 5% as a result of the company’s disappointing Q2 results. HUL’s stock fell as high as 5.78% to ₹2,504.15 per share on the BSE.
Hindustan Unilever, a significant player in the FMCG industry, reported a 4% decline in its standalone net profit for the second quarter of FY25, from ₹2,717 crore to ₹2,612 crore.
Operating revenue for HUL increased slightly by 2% year over year (YoY) to ₹15,319 crore from ₹15,027 crore in Q2FY25. A 3% increase in volume was recorded by the company.
The quarter’s EBITDA decreased 1.3% from ₹3,694 crore to ₹3,647 crore, while the EBITDA margin shrank by 80 basis points year over year to 23.8%.
Based on the Independent Committee’s suggestion, the HUL board also chose to split its ice cream division by December.
Analysts’ thoughts on HUL’s 2024 Q2 results are as follows:
Motilal Oswal
Broking firm Motilal Oswal thinks HUL can continue on its upward growth trajectory even while general demand is poor. It emphasised that HUL has a comparatively higher saliency from rural, which is still doing well.
“We cut our EPS estimates by 2% for FY25 and FY26 each as we moderate our growth assumptions amid raw material cost pressure. HUL’s wide product basket and presence across price segments should help the company achieve a steady growth recovery. Under the new leadership of Mr. Rohit Jawa, HUL is expected to take corrective actions to address the white space, particularly in BPC and F&R. The company commands strong leadership in Home Care, which can be capitalized during improving macros,” MOFSL said.
Based on 60x Sep’26E EPS, which is near the most recent five-year average P/E, it reaffirmed its “Buy” recommendation for Hindustan Unilever shares, setting a target price of ₹3,200 per share.
Nuvama Institutional Equities
Nuvama Institutional Equities believes that HUL’s long-term development trajectory is favourable due to a slow rural recovery and pricing growth returning in H2FY25E/26E. The firm slightly lowers FY25E and FY26E EPS predictions in light of the urban downturn. It increased the target price from ₹3,375 to ₹3,395 and has a “Buy” call on HUL shares.
“For HUL, ice cream is a high-growth, high-investment and low-margin business. In Q3FY25, HUL has taken price increases in tea. For FY25, overall pricing growth will be in a low-single-digit. HUL is investing in enhancing the consumer value proposition, which will help to drive the premiumisation trend,” it said.
Antique Stock Broking
A recovery in the rural market due to a well-spaced monsoon and government stimulus is expected to propel a gradual improvement in HUL’s overall performance, according to Antique Stock Broking.
“We expect maintenance of operating margin on back on cost saving initiatives and higher growth in the premium portfolio. We marginally cut our EPS estimates by 1% for FY25-27E and expect HUL to deliver sales and earnings CAGR of 8% over FY24–27E,” Antique Stock Broking said.
It increased HUL’s share price objective from ₹2,574 to ₹2,666 while keeping its “Hold” recommendation.
HUL shares were down 5.53% at ₹2,511.00 each on the BSE at 10:25 a.m.
