HUL Q2 Review: Dolat Capital Maintains 'Add' Rating — Check New Target Price

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Dolat Capital Report

Hindustan Unilever Ltd.'s Q2 FY26 revenue was in line; however, profitability was a beat. Domestic revenue grew by a mere 0.5% due to the temporary impact of GST changes and extended monsoon conditions in parts of the country.

We expect consumption trends to improve in the near term, led by rate cuts, tax relief, and good monsoons.

Gross margin contracted 70bps YoY due to a temporary price-cost mismatch. Further, Ebitdam contracted by 70bps YoY to 22.9% due to higher ad and other expenses. The company continues to maintain Ebitdam guidance in the region of 22-23% in the near term.

Though Q2 profitability was ahead, we have maintained our FY26/27E EPS estimates at Rs 47.7/53.5 as raw material prices continue to remain elevated. We have introduced FY28E EPS at Rs 58.9.

We remain confident about the long-term premiumization strategy and believe that volume growth would improve in H2 FY26E. Valuing the stock at 48x FY28E EPS, we maintain our ‘Accumulate’ rating with revised target price of Rs 2,855. (Rs 2,783 earlier).

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