Broker’s call: Hindustan Unilever (Add)

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Target: ₹2,575

CMP: ₹2,354.80

Hindustan Unilever’s FY24 Annual Report highlights its thrust on product superiority (3x superior products now vs 2019) and its Intelligent Enterprise initiative (geared to leverage opportunities with digital ecosystem in place). Its transformation journey started early on (a decade ago), inducing better results. But headwinds and muted execution in recent years have played spoilsport.

Going ahead, the company needs to enhance its execution capabilities in the core/base portfolio, where focus should be on driving consumption, with premiumization the key theme. Rural rebound with anticipation of better monsoons is a positive, but we await tailwinds.

We build in CAGR of 8 per cent in topline and 10 per cent in earnings over FY24-27E. Stock’s 12M fwd P/E at 49x is in line with its last 10Y avg fwd P/E, which seems fair.

We await stock tailwinds and believe headwinds are mostly priced-in. Stock could rerate on demand recovery (esp. with rural rebound) in our view, but requires enhanced Mgmt execution. In this note we introduce FY27 estimates and roll-over to Jun-26 earnings from Mar-26; we raise our TP to ₹2,575/share.