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Favourable price expected to aid future growth

Hindustan Unilever (HUL), a subsidiary of Unilever PLC, is India’s leading FMCG company. It has over 35 brands across 20 categories, such as soaps, detergents, shampoos, and skin care

* In Q2FY25, HUL reported a revenue growth of 1.5% YoY, mainly due to growth in the home care segment, while beauty & personal care and foods & refreshment segments declined.

* The home care segment revenue grew 8.0% YoY due to higher volume in the fabric wash portfolio, driven by premiumisation and market development. Such a trend is expected to continue in the future also. Premium dishwash portfolio also led to good volume growth in Household care.

* The beauty & personal care segment declined 1.3% YoY to Rs. 5,735cr, mainly on account of pricing action in the skin cleansing portfolio during the year.

* Higher input costs led to EBITDA declining 1.3% YoY to Rs. 3,647cr. EBITDA margin declined 70bps YoY to 23.5% YoY.

* Resultantly, adjusted PAT declined 3.5% YoY to Rs. 2, 628cr in Q2FY25.

* Due to the persistent nature of inflation in input commodity prices, the company expects low-single-digit price growth in the near future.

Outlook & Valuation

With a recovery in rural demand and the festive season in Q3FY25, healthy consumer demand can be expected in the near term. Launching of innovative products powered by robust distribution channels and strong brand image is expected to bring in high single-digit volume growth across the verticals. Price correction actions to pass on elevated commodity prices would deliver healthy margins and lift the performance further. Hence, we maintain our BUY rating on stock with a revised target price of Rs. 2,820 based on 56x FY26E adjusted EPS

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SEBI Registration Number: INH200000345