Hindustan Unilever’s share price fell 2.27% to Rs 2,490.25, a day after the company reported a 0.3% decline in its second quarter profit at Rs 2,656 crore Vs Rs 2,665 crore in Q2FY23. The company posted a total income of Rs 15,806 crore, again flat, up 3.6% as against Rs 15,253 crore during the same period last year. The FMCG major recorded total sales at Rs 15,364 crore. The company EBITDA stood at Rs 3,797 crore and EBITDA margin at 24.7%.
The share price of Hindustan Unilever (HUL) fell 2.74% in the last five days, while it gained 1.23% in the last one month, 0.22% in the last six months. The share price tumbled nearly 4% in the last one year.
Should you buy, sell or hold HUL shares?
Jefferies: Hold – Target Price: Rs 2,720
“The management remains hopeful of a gradual recovery in volumes going forward, albeit remains watchful of the impact of uneven monsoon. Channel destocking impact should reduce as pricing action is largely done, and realisation growth should be slightly negative in the near term. Management expects EBITDA margin to remain range-bound, as ad-spends will remain
firm and focus is on growth. Retain ‘Hold’. We cut our FY24-26e EPS by 3-4%. We roll over to Sep-25 and retain our ‘Hold’ with a slightly reduced Target Price of Rs 2,720 (Rs 2,770 earlier).”
Prabhudas Lilladher: Hold – Target Price: Rs 2,786
“We factor in GM/EBITDAM expansion of 520/120bps over FY23-26 as benefits of lower RM will be partly neutralized by higher spends on advertising, royalty and lower operating income due to closure of marketing agreement with GSK Asia (Eno, Iodex, Crocin and Sensodyne). We estimate CAGR of 8.3% in sales and 8.4% in PAT over FY23-26 and assign a DCF based Target Price of Rs 2,786 (Rs 2837 earlier). HUL has been flat from last 2 years and offers moderate returns. Sharp increase in crude based inputs is a key risk to our estimates. Retain ‘Hold’.”
HDFC Securities: Reduce – Target Price: Rs 2,550
“Price cuts have impacted the overall growth, and further action seen in skin cleansing and laundry. Local competition remained challenging and further impacted the volume recovery. Small players are growing ahead of large players by 6x for detergent bars and 40% for tea. Benefits of GM expansion (c.700bps YoY) were largely offset by; higher A&P spending (up 65%), capability building (restructuring in HFD portfolio) and an increase in royalty rate which limited EBITDAM expansion to 130bps. We model a gradual recovery in demand, given the 2-3 quarter lag seen between price cuts and demand upticks. We maintain our estimates. We value the stock on 47x P/E on Sep-25E EPS to derive a Target Price of Rs 2,550. Maintain ‘Reduce’.”
Axis Securities: Buy- Target Price: Rs 2,900
“On a longer-term basis, HUL’s growth prospects remain strong as the management focuses on; Driving a broad based portfolio and straddling across the price-value matrix to increase premiumisation, Continued focus on improving efficiency – nano factories, automation, and scaling Shikar to drive overall cost savings initiatives, Market development action to gain market share across the portfolio and strong execution capabilities (which displays its strength in diverse product portfolio and strong financial prowess in this volatile and challenging environment). We expect HUL’s Sales/EBITDA/PAT to grow at 8%/9%/9% CAGR over FY23-26E and maintain a ‘Buy’ rating on the stock with a revised Target Price of Rs 2,900/share. We value the company at 56x sep-25 EPS.”
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