HUL Q3 Results Review: Dolat Capital Maintains 'Accumulate' On The Stock, Says Subdued Demand Persists

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Dolat Capital Report

Hindustan Unilever Ltd.'s Q3 FY25 revenue/Ebitda were in line, while adjusted profit after tax was below our estimates. Revenue grew by mere 1.4% with flat volume growth due to adverse mix and subdued demand conditions. We expect consumption trends to remain subdued in the near term.

Gross margin contracted by 80bps YoY due to volatile commodity prices. A 80/20/10bps increase in raw material cost/employee cost/other expense led to Ebitda margin contraction of 10bps. Going ahead, Ebitdam is expected to be at the lower end of the 23-24% range.

We have lowered our FY26/27E EPS estimates by 3.4/3.4% YoY at Rs 49.7/54.8 to factor in Q3 performance and anticipated pressure in margin expansion.

Despite near-term inflationary concerns, we remain confident about long-term premiumization strategy. Valuing the stock at 50x FY27E EPS we maintain ‘Accumulate’ rating with target price of Rs 2,740

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