HUL Q3 Results Review - Near Term Challenges Persists: Prabhudas Lilladher

Prabhudas Lilladher Report

We cut Hindustan Unilever Ltd.'s FY25/26 earnings per share by 4.2%/4.5% factoring in-

1. sustained pressure on volumes,

2. lower pricing element to support growth and ward off competition from local/regional players and

3. higher investments in advertising and promotion and capability building for long term growth.

Healthcare and beauty and personal care (75% of sales) continue to grow volumes in mid-single digits while food and refreshment is under pressure due to volatile commodity prices and consumer downgrading.

Rural growth is showing signs of pickup; however, a lot depends upon outlook for new crop. While long term growth story led by lower penetration and superior value proposition remains intact, near term growth challenges are likely to persist.

We factor in gross margin/Ebitdam expansion of 90/30 basis points over FY24-26 as HUL invests gains from better mix and commodity pricing in advertising, royalty and innovations.

We estimate CAGR of 9.2% in sales and 8.8% in PAT over FY24-26 and assign a discounted cash flow based target price of Rs 2724 (Rs 2786 earlier).

We expect slow and modest recovery resulting in tepid growth in near term which will provide back ended returns. Retain 'Hold'.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.