Bullish or bearish on Hindustan Unilever: UBS, CLSA, Goldman Sachs stay cautious, Nuvama maintains ‘Buy’ projects up to 38% upside

Hindustan Unilever (HUL) has received mixed reviews from leading brokerages following its Q3 performance. While some highlight long-term growth prospects and margin improvements, others remain cautious due to weak volume growth and lower consumer demand. Here’s what brokerages are saying:

Brokerage Ratings and Target Prices

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Brokerage Rating Target Price (₹) Potential Upside/Downside from CMP (₹2,340)
UBS Neutral 2,700 +15%
CLSA Underperform 1,924 -18%
Goldman Sachs (GS) Neutral 2,480 +6%
Nuvama Buy 3,225 +38%
Investec Hold 2,643 +13%

Detailed Brokerage Insights

UBS: Neutral, Target ₹2,700

  • Positives: Revenue growth was broadly in line, led by volumes in the home care segment.
  • Concerns: Weak product mix impacted UVG (underlying volume growth), and personal care faced pressure from price hikes.
  • EPS estimates for FY25-27 were cut by 1-5% due to near-term demand weakness.

CLSA: Underperform, Target ₹1,924

  • Key Observations: Weak growth and lower margins in Q3; three of four segments saw UVG decline.
  • EPS Cuts: FY25-27 EPS estimates were reduced by 4-6%.
  • Concerns: The acquisition of Minimalist, though strategic, signals management’s focus on growth over margin stability, especially in beauty and wellness.

Goldman Sachs (GS): Neutral, Target ₹2,480

  • Takeaways: Q3 results missed expectations on volume and EBITDA growth, with urban slowdown and downtrading to smaller packs observed.
  • Insights: Soap volumes were impacted by higher price increases and grammage cuts, while the Minimalist acquisition was seen as a fair and complementary move.

Nuvama: Buy, Target ₹3,225

  • Positives: Overall Q3 results were in line, despite volume growth being below expectations.
  • Changes: EPS for FY25/26/27 has been cut by 3-5%, citing current raw material inflation.

Investec: Hold, Target ₹2,643

  • Concerns: No near-term recovery is expected, with challenging growth outcomes reflecting weak demand trends in the sector.
  • Insights: The Minimalist acquisition is likely to contribute less than 1% to FY26E sales, and visible triggers for revenue growth will determine HUL’s earnings and stock price performance.

Conclusion: Diverging Views on HUL

Brokerages remain divided on Hindustan Unilever, with target prices ranging from ₹1,924 (CLSA) to ₹3,225 (Nuvama). While some highlight strong execution and strategic acquisitions, others are concerned about weak UVG, demand slowdown, and margin pressures.

At its current market price of ₹2,340, the stock offers potential upside of up to 38% (Nuvama), while CLSA sees a downside risk of 18%.

Disclaimer: This article is for informational purposes only and does not constitute financial advice.