Hindustan Unilever share price falls after Q1 results; Should you buy, hold or sell the FMCG stock?

Hindustan Unilever share price fell over 2% in early trade on Wednesday after the company reported its earnings for the first quarter of FY25, largely in-line with street estimates. HUL shares declined as much as 2.7% to ₹2,691.35 apiece on the BSE.

The fast-moving consumer goods (FMCG) major Hindustan Unilever Ltd (HUL) reported a net profit of ₹2,538 crore in the June 2024 quarter, rising 3% from ₹2,472 crores in the same quarter last fiscal.

The company’s revenue from operations in Q1FY25 increased 1.3% to ₹15,399 crore, from ₹15,148 crore, year-on-year (YoY). Volume growth was recorded at 4% YoY.

At the operating level, EBITDA grew 2% to ₹3,606 crore, while EBITDA margin increased by 20 bps to 23.8%.

Here’s what brokerages have to say on HUL Q1 results and HUL share price:

Nuvama Institutional Equities

HUL reported Q1FY25 earnings in-line with Nuvama’s estimates. Volumes grew 4% YoY ahead of Nuvama’s estimate of 3%, which is decent in this tough quarter. With improvements in gross margin, HUL took price cuts to pass on the benefits.

We reckon HUL shall win market share in personal wash given its recent disruption in soaps. We are near the exit of an adverse cycle of sharp inflation followed by steep deflation, boding well for HUL from a market share gains perspective, Nuvama Equities said.

The brokerage firm raised FY26E EPS (earnings per share) estimates by 2%. It maintained a ‘Buy’ rating on HUL shares and raised the target price to ₹3,375 apiece, from ₹2,885 earlier.

Emkay Global

Emkay Global remains positive on HUL on hope of better execution by the new leadership. The management emphasized that its strategies are aimed at transforming the company to outperform, which will pave the way to growth recovery in segments. Rebound in rural would be crucial, and will help drive growth in HUL’s mass-end portfolio, which remains under pressure, said the brokerage firm.

It expects near-term performance to stay muted, but will see gradual improvement (8% sales CAGR in FY24-27E). Focus on topline will limit margin recovery and the brokerage firm builds-in 120 bps margin recovery over next 3 years.

Emkay Global maintained a ‘Buy’ call and raised HUL share price target to ₹3,100 per share from ₹2,900 earlier.

Antique Stock Broking

Antique Stock Broking expects a gradual improvement in HUL’s overall performance driven by recovery in rural market on the back of well spread out monsoon and government stimulus. Despite moderation in commodity price inflation, it expects minimal expansion in operating margin (40 bps over FY24–27E) as the company would invest in brands to gain market share across categories.

The broking house maintains its estimates and expects HUL to deliver sales and earnings CAGR of 8% over FY24–27E. It maintained a ‘Hold’ recommendation on HUL stock with a target price of ₹2,574 per share.

At 9:30 am, HUL shares were trading 2.39% lower at ₹2,700.40 apiece on the BSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.