Buy HUL Shares Maintains Motilal Oswal, Sees 24% Potential Upside

HUL's B2B app, Shikhar, now reaches 1.4 million retail outlets and has a 70% monthly active user rate. Shikhar has partnered with ONDC to help retailers list their products and sell their entire range online. With a diverse customer base—including traditional distributors, digital platforms, and neighborhood retailers—HUL’s products are available in over 9 million retail outlets, supported by 3,500 distributors across more than 2,000 towns and channel partners.

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Motilal Oswal Report

Hindustan Unilever Ltd. continues to place the building blocks for future growth, staying ahead of its peers. HUL has also continued to strengthen the key drivers of its success in India over the last decade, including-

pioneering the use of technology to generate data and facilitate decision-making;
the Winning in Many Indias strategy, focused on decentralization and localized strategies;
recognizing trends and investing in them early on;
funneling cost savings back into the business; and
strong execution capabilities that have led to positive earnings momentum.

HUL has continued to strengthen its brand, distribution network, and quality of personnel, thereby staying ahead of its peers. In addition, through its analytics and R&D initiatives in recent years (much ahead of its peers), HUL is ensuring it remains resilient in a dynamically changing environment.

Under the new leadership of Mr. Rohit Jawa, HUL has initiated corrective actions to address the white space, particularly in B&W and Foods. The company commands strong leadership in Home Care, which can be capitalized as macro conditions improve.

The company focuses on volume-led growth through various initiatives to strengthen its core portfolio, expand total addressable market, drive premiumization, and transform its B&W and Foods portfolios. It is also exploring new growth levers through inorganic opportunities.

The company has recently (Q4 concall) downgraded Ebitda margin guidance to 22-23% vs. earlier guidance of 23-24% to accelerate investments in marketing/promotion/etc.

We expect cost impact to be front-ended, while the recovery in volumes will likely be gradual. We continue to believe that in a steady macro environment, HUL will boost its volume performance in FY26/FY27. We reiterate our Buy rating with a target price of Rs 2,850 (55x P/E FY27).

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