HUL Q1 Result Review - Performance Below Estimate; Downgrade To 'Reduce': Dolat Capital

Dolat Capital Report

Hindustan Unilever Ltd.'s results came below our estimate. Revenue growth was led by 3% volume growth versus our estimate of 5%. Going ahead, volume growth would lead the value growth due to less opportunity for price hikes.

HUL's gross margin expanded by 260 basis points YoY due to softening in commodity prices. However, 150/50 bps increase in other expense/advertising and promotion spends restricted the Ebitda margin expansion at 50 bps – came below estimate.

To factor in Q1 performance, we have downward revised our earnings per share estimates by 2.3% for FY24/25E at Rs 46.6/51.4.

Continue to value the stock at 55 times FY25E EPS to arrive at a target price of Rs 2,826. Downgrade to 'Reduce'.

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