Hindustan Unilever Ltd. share price target

HUL’s Revenue for Q4FY25 stood at INR 1,56,700 Mn., up 3.0% YoY (-0.9% QoQ), largely in-line with our estimates.
EBITDA came in at INR 36,190 Mn. up 2.4% YoY (-2.1% QoQ), which was below our estimates mainly due to higher-than-expected employee costs.

4QFY25 sales were in line, but EBITDA 2% ahead of Bloomberg consensus

With an 8% upside from the CMP, we maintain HOLD

HUL’s Q4 was broadly in line with the Street’s expectations, with volumes growing 2% y/y (vs. 0-2% estimated) and the EBITDA margin at 22.8% (vs. 23%).

Hindustan Unilever’s (HUVR) 4QFY25 consolidated revenue was up 3% at INR154.5b (in line), with 2% underlying volume growth (est. 1%, 0% in 3QFY25). Rural demand continues to show gradual improvement, while urban demand remains subdued.

With an 8% upside from the CMP, we downgrade the stock to HOLD

For Q3FY25, the revenue increased 1.6% YoY (-0.7% QoQ) to INR 158,180 Mn, largely in line with our estimates +1.2%.
EBITDA remained flat on YoY basis(+ 0.8% YoY,-2.6% QoQ) to INR 36,950 Mn, beat our estimates by 2.0%.

Compared to Bloomberg consensus, 3QFY25 sales were in line, while EBITDA was 1% higher

Hindustan Unilever’s (HUVR) 3QFY25 revenue was up 2% at INR155.9b (in line), with flat underlying volume growth (est. 1%, 3% in 2QFY25). Demand recovery continues to witness a delay, with urban consumption reeling under pressure.

HUL’s Q3FY25 performance was in line with expectations, with revenues growing by 1.4% y-o-y to Rs. 15,408 crore (versus expectation of Rs. 15,682 crore) with underlying volumes flat y-o-y. Homecare revenues grew by 5.4% y-o-y (high single-digit volume growth), beauty & well-being revenues grew by 1.4% y-o-y (low single-digit volume decline), personal care revenue declined by 3% y-o-y (mid single-digit volume decline), while foods & refreshments revenue stood flat y-o-y (mid single-digit volume decline).

We retain our positive stance on HUL, despite a sub-par financial performance and muted near-term demand outlook. Medium term, we see HUL’s enhanced execution absorbing the impact of macro stress (if it persists).

We consider media insights (link), of HUL looking to acquire the Minimalist brand, as positive. With 100% own capacity and differentiated approach to address skin- and hair-care needs of cohorts, Minimalist has rapidly logged Rs3.5bn in revenue for FY24, with a mid-single-digit margin.

HUVR's outlook of stable demand trends for FY25 appears conservative as the building blocks for rural demand remain favourable

HUL long-term outlook remains positive and with a 18% upside potential from CMP we maintain a BUY rating on the stock.

Hindustan Unilever (HUVR) hosted Capital Market Day-2024 and underlined its business moats and competitive positioning across its categories. The company aimsto remain relevant within India’s large consumption theme.

HUL’s annual investor day highlights its commitment to the future, where growth ahead should outperform (vs market) with enhanced thrust and execution on future opportunities in core and a market-making strategy.

We re-iterate a Buy rating on HUL and keep PT unchanged at Rs. 3,079. Stock has corrected 18% form recent highs and trades at 56x/51x/46x its FY25E/FY26E/FY27E EPS, respectively.