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Hindustan Unilever Limited (NSE: HINDUNILVR), one of the biggest fast-moving consumer goods companies of India has been in the forefront of driving the trends among the consumers.
However, given a stock, the performance and overall market sentiment are proven to encompass the positive and negative impacts as the company comes up with new and definite strategies to achieve long term goals.
Here in this article , we will cover the movements of share price of HUL, financial performance, strategic information and investment recommendations.
HUL’s stock was trading at ₹2,479.15 and it was down 0.68% for the day and as at close. This price is close to a key support zone at ₹2,450, after a bearish trend since it hit a 52-week high of ₹3,035 in September.
Year-to-date the stock has declined by 5.32% underperforming S&P BSE Sensex which gained 11.08% in the same period. The 1-year return for HUL stands at -1.61% compared to the benchmark’s 18.92%.
HUL’s current price is trading slightly above and near a critical support level of ₹2,450. If the ₹2,450 support holds, the stock may rebound and target resistance levels at ₹2,730 and the 52-week high of ₹3,028.
A break below ₹2,450 support zone could see the price decline further, testing the ascending trendline as the next support zone.
Closely monitor the price action at ₹2,450 in the coming weeks to assess the stock’s short-term direction before investing in the stock.
During Capital Markets Day on 29 th November, HUL laid out plans for achieving double-digit growth in earnings through innovation, a push towards premium products and effective digitalisation.
Key Initiatives: HUL plans to shift consumer packaging from powders to liquids in home care and expand its beauty and nutritional brands.
Growth Framework: It also proposed the ‘Core,’ ‘Future Core,’ and ‘Market Makers’ advertising strategy to consolidate existing brands along with surveying new market domains.
Challenges: While brokers like Citi have a bullish outlook with a target price of ₹3,400, others like Morgan Stanley remain cautious due to execution risks and competition from smaller FMCG players and direct-to-consumer brands.
HUL’s financial performance reflects a stable, profitable business model, but some valuation metrics raise concerns:
Profitability: HUL reported a profit margin of 16.45% and a return on equity (ROE) of 20.23%.
Revenue and Earnings: The trailing 12-month revenue stood at ₹624.1 billion, with a net income of ₹102.68 billion, translating to an EPS of ₹43.68.
Valuations: The stock trades at a P/E ratio of 56.76, significantly higher than the broader market, reflecting premium valuation expectations. Its price-to-book ratio is 11.55, and EV/EBITDA is 36.70.
1. Strong Brand Portfolio: HUL is a market leader with a diverse portfolio of iconic brands across categories like home care, beauty, and nutrition.
2. Innovation and Premiumisation: The company’s focus on premium products and affluent consumers aligns with evolving market trends.
3. Cash Flow and Dividend Yield: HUL maintains robust free cash flow and offers a forward dividend yield of 1.72%.
1. Valuation Concerns: HUL’s high valuation metrics suggest limited room for error in execution.
2. Urban Demand Challenges: Slow volume growth and rising input costs may pressure margins in the near term.
3. Intense Competition: Smaller players and D2C brands are increasingly capturing market share in key categories.
HUL’s long-term growth initiatives, supported by innovation and premiumisation, position the company well for sustained performance. However, near-term headwinds, including high valuations, weak urban demand, and competitive pressures, warrant a cautious approach. Investors holding the stock can monitor support at ₹2,450 and consider adding positions if it rebounds convincingly.
For new investors, waiting for further clarity on earnings or a price correction might be prudent.
Hindustan Unilever remains a stalwart in India’s FMCG sector, leveraging innovation and premiumisation to drive future growth. However, its near-term performance has been weighed down by market conditions and valuation concerns. Investors should adopt a balanced approach, focusing on HUL’s long-term potential while being mindful of short-term risks.
