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Dolat Capital Report
Hindustan Unilever Ltd.'s core results came in-line with our estimates. Despite 3% volume growth, revenue growth was moderate due to price pass-on during the year.
However, as HUL begins implementing price hikes, we expect an improvement in value growth moving forward.
Gross margin contracted by 170 bps YoY due to volatile commodity prices. A 170/30/50 bps increase in raw material cost/employee cost/other expense led to Ebitda margin contraction of 70 bps. Going ahead, Ebitdam is expected to remain at current levels.
We have lowered our FY25/26E EPS estimates by 0.8/2.2% YoY at Rs 46.6/51.4 to factor in Q2 performance and divestment of ice-cream business, while introducing FY27E EPS at Rs 56.7.
Despite concerns over near-term inflationary pressures, we remain confident about long-term premiumization strategy. Maintain ‘Accumulate' rating with target price of Rs 2,978.
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