Target: ₹2,875

CMP: ₹2,716.80

Hindustan Unilever’s Q1-FY25 revenue growth stood at +1.3 per cent (our estimate at -0.6 per cent) led by a 4 per cent volume growth (our est. at 2 per cent). Rural markets improved gradually.

HUL posted a 4 per cent underlying volume growth in Q1-FY25, with sales growth at 1.3 per cent. Price cuts were taken to the tune of 2.3 per cent during the quarter, largely in the personal care and home care segments. Rural markets (40 per cent salience) saw some green shoots towards the end of the quarter.

Home care/BPC/F&R posted 4.6 per cent/flat/1.4 per cent growth, respectively. Volume in F&R was flat while home care posted high-single digit volume growth in 1Q. Corrective action at mass-end of the portfolio & premiumisation agenda to drive a gradual recovery.

We expect the demand scenario to remain subdued in the near term. Initiatives laid out to drive recovery in the mass and premium ends of the portfolio should aid a gradual recovery.

We roll forward to 51x Sep 2026 EPS (from 46x earlier), reiterating our Hold rating on HUL with a higher target price of ₹2,875, (₹2,400 earlier). Downside risk: Lower-than expected sales growth. Upside risk: Faster recovery in the EBITDA margin.