HUL share price tanks over 5% after Q2 results. Should you buy the FMCG stock?

Hindustan Unilever (HUL) share price plunged over 5% on Thursday after the company’s Q2 results disappointed Street. HUL shares declined as much as 5.78% to ₹2,504.15 apiece on the BSE.

FMCG major Hindustan Unilever reported a 4% fall in its standalone net profit for the second quarter of FY25 at ₹2,612 crore, compared with ₹2,717 crore in the same period last year.

HUL’s revenue from operations in Q2FY25 rose marginally by 2% to ₹15,319 crore from ₹15,027 crore, YoY. The company reported a volume growth of 3%.

EBITDA for the quarter fell 1.3% to ₹3,647 crores from ₹3,694 crores, while the EBITDA margin narrowed by 80 bps YoY to 23.8%.

Moreover, HUL board also decided to separate its ice cream business by December, based on the recommendation of the Independent Committee.

Here’s what analysts have to say on HUL Q2 results 2024:

Motilal Oswal

Despite weakness in overall consumption, brokerage firm Motilal Oswal believes HUL can still see an upward growth trajectory. Rural is still performing well, and HUL has relatively higher saliency from rural.

“We cut our EPS estimates by 2% for FY25 and FY26 each as we moderate our growth assumptions amid raw material cost pressure. HUL’s wide product basket and presence across price segments should help the company achieve a steady growth recovery. Under the new leadership of Mr. Rohit Jawa, HUL is expected to take corrective actions to address the white space, particularly in BPC and F&R. The company commands strong leadership in Home Care, which can be capitalized during improving macros,” MOFSL said.

It reiterated ‘Buy’ rating on Hindustan Unilever shares with a target price of ₹3,200 apiece, based on 60x Sep’26E EPS, close to last five-year average P/E.

Nuvama Institutional Equities

According to Nuvama Institutional Equities, a gradual rural recovery along with pricing growth coming back in H2FY25E / 26E bodes well for HUL’s long-term growth trajectory. Given the urban slowdown, the brokerage marginally cuts FY25E and FY26E EPS estimates. It has a ‘Buy’ call on HUL shares and raised the target price to ₹3,395 from ₹3,375 earlier.

“For HUL, Ice cream is a high-growth, high investment and low-margin business. In Q3FY25, HUL has taken price increases in tea. For FY25, overall pricing growth will be in a low-single digit. HUL is investing in enhancing the consumer value proposition, which will help to drive the premiumisation trend,” it said.

Antique Stock Broking

Antique Stock Broking expects a gradual improvement in HUL’s overall performance driven by recovery in the rural market on the back of well spread out monsoon and government stimulus.

“The rise in commodity price inflation, we expect maintenance of operating margin on back on cost saving initiatives and driving higher growth in premium portfolio. We marginally cut our EPS estimates by 1% for FY25-27E and expect HUL to deliver sales and earnings CAGR of 8% over FY24–27E,” Antique Stock Broking said.

It maintained a ‘Hold’ recommendation and raised HUL share price target to ₹2,666 from ₹2,574 earlier. 

At 10:25 am, HUL shares were trading 5.53% lower at ₹2,511.00 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.