HUL Q4 Results Review: Performance Expected To Recover Gradually, Says Dolat Capital, Maintaining 'Accumulate'

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Dolat Capital Report

Hindustan Unilever Ltd.'s Q4 FY25 revenue grew 2.4% (in line), primarily driven by 2% volume growth, however, Ebitda and adjusted profit after tax were below our estimates. We expect consumption trends to remain subdued in the near term.

Gross margin contracted by 140bps YoY due to volatile commodity prices; while a 140/10bps increase in raw material cost/other expense led to Ebitda margin contraction of 30bps. The company's emphasis on delivering the right price-value proposition, coupled with continued investment in high-growth demand space, has led to a revised Ebitda margin guidance to 22–23% for the next two to three quarters.

We have lowered our FY26/27E EPS estimates by 5.4/2.6% YoY at Rs 47/53.4 to factor in Q4 performance, anticipated pressure on margins and management guidance.

Despite near-term inflationary concerns, we remain confident about the long-term premiumization strategy.

Valuing the stock at 50x FY27E EPS we maintain ‘Accumulate’ rating with revised target price of Rs 2,668. (Rs 2,740 earlier)

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