HUL Q2 Results Review - Margin Expansion Continues; Upgrade To 'Accumulate': Dolat Capital

Dolat Capital Report

Hindustan Unilever Ltd.’s core results came in line with our estimate. Revenue growth was led by 2% volume growth was in line with estimate.

Going ahead, volume growth would lead the value growth due to less opportunity for price hikes.

Gross margin expanded by 690 basis points YoY due to softening in commodity prices. However, 420/160 basis points increase in advertising and promotion spends/other expense restricted the Ebitda margin expansion at 130 bps – came marginally ahead of estimate.

As core performance was in line, we have maintained FY24/25E earnings per share estimates at Rs 46.6/51.4 and introduced FY26E EPS at Rs 57.3. Valuing the stock at 49 times FY26E EPS maintain target price at Rs 2,826. Upgrade to 'Accumulate'.

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