Jeffries sees 6% upside potential in Hindustan Unilever and assigned Hold rating with an upside target of Rs 2,720. “In our base case, we forecast c.7% annual growth in revenues over FY23-26E with 140bps EBITDA margin expansion. Input inflation is abating, albeit HUL is seeing only a gradual volume growth recovery. We forecast EPS to rise at a 10% CAGR over FY23-26E. We value HUL at 52x Sep-25 earnings, slightly below the 5-yr average, to arrive at a price target of Rs 2,720, said Jefferies in its report.
Jeffries highlighted the organisational changes within the company, as Hindustan Unilever split its BPC segment into two, namely Beauty & Well-being and Personal Care, to further sharpen focus and align with global Unilever segments. Harman Dhillon and Kartik Chandrasekhar have been appointed to lead these segments. Additionally, to spearhead the digital transformation, the company has appointed Arun Neelakantan as Chief Digital Officer, who is now also a member of the management committee.
Jeffries, however, expressed concerns about the slow growth of the FMCG market and said that October’s performance mirrored September, with expected festive season growth not materializing. Industry volumes grew modestly at 2% 2Y CAGR, with rural areas flat and urban areas growing 3% over 2 years.
