Prabhudas Lilladher has given Accumulate recommendation for Hindustan Unilever with a target price of Rs. 2798 in its research report issued on Oct 21, 2022

Prabhudas Lilladher’s research report on Hindustan Unilever

We cut FY23/24/FY25 EPS by 2.1%/4.6%/2.6% factoring in elevated RM costs and bottomed out adspends. HUL has guided for QoQ GM improvement in 2H23 with high priced inventory utilized, narrowing price cost gap and calibrated price hikes. 2Q23 displayed mid-single volumes led by double digit volume growth in Fabric wash, mid-single digit volume growth in Tea & mid-teens volume growth in Foods. Ad spends/sales promotions are expected to increase in 2H in line with changing market dynamics. We remain constructive on the longer term story given 1) market share gains in 75% of portfolio 2) strong innovation pipeline 3) scale up in emerging categories (Green Tea, Fabric Conditioner, Liquid Detergents, Liquid Dishwash, Hair conditioner) 4) distribution gains from strategies like WIMI and SHIKHAR and 5) faster growth in premium portfolio (2x than company growth).


We estimate 12.9% Sales and 16.6% PAT CAGR over FY22-25 and assign a DCF based target price of Rs2798 (Rs2827 earlier). Retain Accumulate.

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