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HUL Stock: Brokerages See Balanced Risk-Reward Post-Correction
29 Jul
Summary
- Multiple brokerages upgraded HUL stock after Q1 earnings, citing attractive valuations.
- HUL reported 5% domestic volume growth in Q1, slower than previous quarter.
- Home Care led segment growth with 14% underlying sales, but Personal Care lagged.
Hindustan Unilever Ltd. (HUL) saw its shares come under scrutiny following Q1 earnings, with a significant 7% drop despite revenue growth. However, brokerages are now turning constructive, with HSBC upgrading to 'Buy' at ₹2,450, highlighting improving performance in Home Care and Beauty & Wellbeing, alongside attractive post-correction valuations.
CLSA also upgraded HUL to 'Hold' with a revised target of ₹1,804, observing that premiumization is aiding growth despite a 5% volume moderation. While revenue and EBITDA slightly missed expectations, improvements were noted in most segments, with Home Care showing strong 14% underlying sales growth. The company maintained its guidance amid commodity price volatility.
Jefferies maintained its 'Buy' rating and ₹2,850 target, stating the stock's decline post-results was excessive relative to the earnings miss. Emkay Global kept its 'Add' rating with an unchanged ₹2,350 target, acknowledging demand concerns but seeing an improved risk-reward profile.
In Q1, HUL's net profit declined 3% year-on-year to ₹2,673 crore, impacted by higher taxes. Revenue surged 10% to ₹17,341 crore, the fastest growth in 13 quarters. Domestic volume growth was 5%, with Home Care and Beauty & Wellbeing outperforming, while Personal Care and Foods saw slower growth due to input cost pressures.
