Hindustan Unilever Ltd.'s June-quarter earnings prompted Goldman Sachs and Citi to lower their target prices after the FMCG major missed Street estimates on revenue and profit, while Jefferies, Morgan Stanley and Macquarie maintained their ratings. Analysts said the miss was modest and management's commentary on demand, pricing and margins remained encouraging, leaving the broader earnings outlook intact.
Brokerages said the earnings miss was modest and largely reflected weakness in a few categories, while management's commentary on demand, pricing and margins remained encouraging. Most expect revenue growth to accelerate over the rest of FY27 as pricing actions, premiumisation and portfolio recovery gather pace.
The company reported double-digit revenue growth during the quarter, although profit declined and operating margin contracted slightly from a year earlier.
HUL Q1 Highlights (Consolidated, YoY)
- Revenue rose 10% to Rs. 17,341 crore from Rs. 15,757 crore. (Bloomberg Estimate: Rs. 17,571 crore)
- EBITDA increased 8.4% to Rs. 3,947 crore from Rs. 3,640 crore. (Bloomberg Estimate: Rs. 3,980 crore)
- EBITDA margin stood at 22.8% versus 23.1% a year ago. (Bloomberg Estimate: 22.7%)
- Net profit declined 3% to Rs. 2,673 crore from Rs. 2,756 crore. (Bloomberg Estimate: Rs. 2,811 crore)
- Underlying volume growth was 5% versus Street expectations of 6%-8%.
Among key businesses, Home Care revenue increased 13% year on year to Rs. 6,554 crore, while EBIT for the segment rose 1% to Rs. 1,137 crore. Personal Care revenue grew 3% to Rs. 2,624 crore, with EBIT increasing 9% to Rs. 517 crore.
Management said demand conditions remained stable across urban and rural markets despite persistent inflationary pressures. Brokerages also highlighted continued premiumisation and improving execution as positives for the business.
Here's What Brokerages Are Saying After HUL Announced Q1 Results
Jefferies
- Maintained 'Buy'; Target Price At Rs. 2,850
Seven percent share price decline appears excessive given the limited EBITDA miss.
Weakness in some categories was offset by better performance elsewhere.
Growth and profitability have improved consistently over recent quarters.
Management commentary remained constructive on demand and margins.
Goldman Sachs
- Maintained 'Buy'; Target Price Cut To Rs. 2,450 From Rs. 2,725
Expects revenue growth to accelerate further during FY27.
Home Care growth should improve as pricing actions take effect.
Encouraged by recovery in the Beauty & Wellbeing business.
Foods business remains steady, while Personal Care continues to lag.
Expects EBITDA margins to remain resilient despite input cost inflation.
Citi
- Maintained 'Buy'; Target Price Cut To Rs. 2,650 From Rs. 2,750
Growth momentum remains intact.
FY27 outlook remains constructive.
Demand environment continues to remain stable.
Improving execution, premiumisation and channel transformation support the outlook.
Morgan Stanley
- Maintained 'Equal-weight'; Target Price At Rs. 2,480
Management commentary remained optimistic.
Demand conditions are expected to stay stable.
Inflation has not materially affected consumption.
Rural and urban demand continue to remain resilient.
Monsoon progress and geopolitical developments remain key monitorables.
Macquarie
- Maintained 'Outperform'; Target Price At Rs. 2,860
June-quarter performance was broadly in line with expectations.
Volume growth moderated sequentially.
Continued weakness in the soaps business due to inflation remains a concern.
Positive on the overall FMCG demand outlook.
Premium portfolio continues to outperform.
Greater clarity on volume recovery remains the key near-term trigger.
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