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Yes Securities Report
Hindustan Unilever Ltd.'s Q2 FY25 performance was in-line with our estimate. Underlying Volume Growth came in slightly below at 3% (five-year compound annual growth at ~2.8%) versus our estimate of 4%. UVG decline in Soaps and Tea was offset by high-single digit UVG in Fabric Wash and Household Care.
HUL's tea category growth was impacted by down gradations while soaps will take couple of quarters to recover from the recent price actions at the mass end. We continue to expect overall UVG to be better in H2 but it is more gradual than expected.
This along with low-single digit pricing (anniversarization of price cuts plus additional calibrated price hikes in soaps and tea) and no major improvement in Ebitda margins from current levels of 23-24% leads to just 5.7% earnings growth in FY25.
We roll-forward our target price to FY'27E EPS, giving us a target price of Rs 2,845. Maintain Neutral.
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