HUL Share Price – HUL Stock Falls 3% After Strong Q1 Report – Should You Invest?

HUL Share Price – Hindustan Unilever (HUL) witnessed a decline of over 2% in its share price during early trading on Wednesday, following the release of its first-quarter FY25 earnings report. The stock fell by as much as 2.7%, reaching ₹2,691.35 per share on the Bombay Stock Exchange (BSE). Despite reporting earnings that were largely in line with street estimates, the stock faced a drop, prompting questions about whether it is an opportune moment for investors to buy.

Q1 FY25 Performance Overview

For the quarter ending June 30, 2024, Hindustan Unilever reported a net profit of ₹2,538 crore, reflecting a 3% year-on-year increase. This result was closely aligned with the street estimates of ₹2,541 crore. The company’s revenue from operations also rose by 2%, reaching ₹15,166 crore, compared to ₹14,931 crore in the same period last year.

HUL’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for Q1 stood at ₹3,606 crore, up from ₹3,521 crore the previous year, representing a 2% growth. The EBITDA margin improved to 23.8%, an increase of 20 basis points from the prior quarter. Total expenses for the quarter rose by 1.5% to ₹12,116 crore from ₹11,931 crore a year ago. Profit after tax, excluding exceptional items, was ₹2,572 crore, marking a 3% increase. The quarter also included restructuring expenses of ₹48 crore.

Segment Revenue Performance

In terms of segment performance, Hindustan Unilever’s revenue from its Home Care segment reached ₹5,675 crore for Q1 FY25, up from ₹5,425 crore in Q1 FY24. The Beauty & Wellbeing segment saw a slight increase, with revenue rising to ₹3,199 crore from ₹3,103 crore year-on-year. Conversely, the Personal Care segment experienced a 4.4% decline in revenue, falling to ₹2,386 crore from ₹2,498 crore in the previous year. The Foods & Refreshment segment reported a revenue increase to ₹3,850 crore, compared to ₹3,797 crore in Q1 FY24.

Brokerage Insights on HUL

Investec’s Rating and Target Price

Investec has maintained a “Hold” rating on Hindustan Unilever and raised its target price to ₹2,797 from ₹2,439. The brokerage observed that HUL’s Q1 performance slightly exceeded estimates across all parameters. However, the underlying volume growth (UVG) was impacted by declines in the Personal Care and Foods segments. Nonetheless, premium categories continue to show growth.

Motilal Oswal’s Outlook

Motilal Oswal has upheld its “Buy” rating on Hindustan Unilever, increasing its target price to ₹3,250 from ₹2,797. The brokerage highlighted no significant changes in its EPS (Earnings Per Share) estimates for FY25 and FY26. They anticipate that HUL’s diverse product range and presence across various price segments will support steady growth recovery. Under the leadership of Mr. Rohit Jawa, HUL is expected to address gaps, particularly in the Beauty & Personal Care (BPC) and Foods & Refreshment (F&R) segments. Motilal Oswal projects a 10% EPS growth for FY25 and 12% for FY26, based on a valuation of 60x June 2026 EPS.

Emkay Global’s Perspective

Emkay Global has maintained its “Buy” rating on HUL and increased its target price to ₹3,100 from ₹2,900. The firm is optimistic about the company’s prospects under new leadership, which is expected to enhance execution and growth recovery across various segments. Emkay Global forecasts an 8% sales CAGR (Compound Annual Growth Rate) from FY24 to FY27 and anticipates a 120 basis points margin recovery over the next three years. The report also notes that Q1 results were largely in line with expectations, with a 4% increase in volume growth. The increased target valuation multiple of 58x reflects about a 5% premium to the historical average forward P/E ratio.

HUL Stock Performance Over the Past Year

Hindustan Unilever shares have shown positive returns across various time frames. Over the past month, the stock has provided an impressive return of 11.44%, showcasing its stability and growth potential. The past six months have been even more favorable, with a significant increase of 11.43%, indicating a strong upward trend. Year-to-date, HUL shares have surged by 2.47%, reinforcing the stock’s positive momentum in the current fiscal year. In the last twelve months, the stock has delivered a notable return of over 5.46%, underscoring its sustained growth and attractiveness to investors.

Despite the recent dip in Hindustan Unilever’s share price, the company’s Q1 FY25 performance highlights continued growth in key areas. Analyst recommendations vary, with some suggesting that the stock remains a good buy due to its strong market position and growth prospects. Investors should consider both the short-term fluctuations and long-term potential when evaluating their investment decisions in Hindustan Unilever.

FAQ on Hindustan Unilever’s Q1 FY25 Earnings Report

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