Shares of Hindustan Unilever (HUL) rose as much as 3 per cent on Wednesday after JPMorgan reiterated its ‘Overweight’ rating on the FMCG major, citing resilient demand trends, premiumisation-led growth and improving execution across business segments.
The brokerage maintained a target price of Rs 2,550 per share, implying an upside potential of nearly 20 per cent from the stock’s previous closing price of Rs 2,132.80.
The positive outlook follows a meeting with HUL’s management, during which the company highlighted a stable demand environment supported by calibrated pricing actions, steady rural demand and continued premiumisation in urban markets.
According to JPMorgan, urban premiumisation remains a key growth driver, while the rural business continues to deliver healthy volume growth and provide support to overall demand.
The brokerage noted that HUL’s ongoing organisational restructuring, aimed at enhancing execution across business units, along with its omnichannel strategy spanning quick commerce and specialised general trade channels, should help sustain the company’s improving revenue growth trajectory.
JPMorgan identified liquid products within the Home Care and Personal Care segments, premium Beauty & Wellbeing brands and the expanding Foods portfolio as the company’s primary medium-term growth engines.
On margins, management guided for FY27 EBITDA margins in the range of 22.5 per cent to 23.5 per cent despite inflationary pressures. The brokerage said pricing actions, productivity gains and overhead optimisation initiatives are expected to offset input cost inflation of nearly 10 per cent.
It added that any gains from premiumisation-driven gross margin expansion are likely to be reinvested into brand-building and marketing initiatives to support long-term growth.
HUL continues to enjoy strong support among market analysts. Of the 41 brokerages covering the stock, 29 have a ‘Buy’ recommendation, nine maintain a ‘Hold’ rating and three recommend ‘Sell’. Consensus target prices imply an upside of around 21 per cent from current levels.
Shares of HUL were trading 2.6 per cent higher at Rs 2,188 on Wednesday. Despite the rally, the stock remains down around 5 per cent over the past month and has declined by a similar margin so far this year. |
