Systematix expects gradual pickup in volume growth over FY26E-FY27E as HUL rejigs its portfolio to expand into high-growth categories (premium beauty, laundry/dishwash liquids, bodywash, international foods, highscience products in nutrition) and launches products to extract growth in portfolio gaps.
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Systematix Report
While headline growth remains moderate, we are enthused by more evenlybalanced growth across categories, especially with sequential pickup in soaps, mass skin care and nutrition, even as detergents, dishwash, hair care, oral care, premium skin and beverages hold firm.
We expect gradual pickup in volume growth over FY26E-FY27E as Hindustan Unilever Ltd. rejigs its portfolio to expand into high-growth categories (premium beauty, laundry/dishwash liquids, bodywash, international foods, highscience products in nutrition) and launches products to extract growth in portfolio gaps.
Realizations should benefit from sustained pricing in soaps/ beverages, and improving product mix/premiumization. However, with-
sustenance of this recent turnaround in key categories yet to be established,
near/medium-term margin outlook moderated, and
valuations looking full, we remain cautious on the name.
We marginally trim our FY26E-FY27E estimates by 1-2%; we introduce FY28E estimates, and build revenue/PAT CAGR of 7% over FY25-FY28E.
We maintain our Hold rating; we roll forward valuation to June-2027E EPS (from March-2027) and value the stock at P/E of 52x (at a discount to its historical long-period average multiple to factor in near-term demand uncertainty and range-bound margins), leading to a target price of Rs 2,575 (vs Rs 2,410 earlier).
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