Buy Hindustan Unilever Ltd for the Target Rs 2,500 by Motilal Oswal Financial Services Ltd

Healthy revenue; home care margins under pressure * Hindustan Unilever (HUVR) registered consolidated revenue growth of 10% (adjusted for the ice-cream demerger) to INR171.8b (est. INR170.2b). HUL clocked healthy double-digit revenue growth after 12 quarters of single-digit growth. Underlying volume growth stood at 5% YoY (est.6%, 6% in 4QFY26), partially impacted by softer volumes in Tea and Soaps, while the rest of the portfolio witnessed an acceleration in volume growth. *Home Care revenue rose 13% YoY on high-single-digit UVG. However, EBIT remained flat, resulting in a 220bp YoY margin contraction to 17.3% (the lowest in 15 quarters) amid elevated raw material inflation. Beauty & Wellbeing delivered 12% revenue growth and 13% EBIT growth; Personal Care reported 3% revenue growth and 9% EBIT growth; and Food & Refreshment posted 7% revenue growth and 14% EBIT growth. * Gross margin remained under pressure, contracting 80bp YoY to 49.5% (vs est. 50.5%, 50.3% in 4QFY26). Ongoing geopolitical uncertainties have led to 10% RM inflation. HUL has taken ~5% cumulative price hike in 1QFY27 and indicated that it will implement further calibrated pricing actions if commodity inflation persists. EBITDA margin contracted 30bp YoY to 22.8%. (est. 23.2%). Management reiterates its medium-term EBITDA margin guidance range of 22.5-23.5%. * HUVR continues to remain focused on driving volume-led revenue growth. Despite concerns around rising crude prices and macro volatility, HUL believes it is well-positioned to navigate the environment through commodity hedges, accelerated cost-saving initiatives, portfolio transformation strategies, and strengthening omnichannel capabilities. Management remains optimistic about delivering better performance in FY27 vs FY26. We reiterate our BUY rating on the stock with a TP of INR2,500 (45x on Mar’28E EPS). Management conference call highlights * The company expects FY27 to be better than FY26, supported by stable demand, portfolio transformation, market development, and channel expansion, while remaining watchful of global uncertainties and the monsoon. * Quick Commerce continues to grow 40–50% despite increased competition from new entrants. Growth is being driven by better availability, channel-specific assortments, price pack architecture, stronger platform partnerships, and dataled execution. * The soaps category remains under pressure due to two consecutive years of palm oil inflation, resulting in pricing-led growth for the category. * Health & Wellbeing remained soft due to the OZiva transition, although the company continues to invest in new offerings and remains confident of its longterm growth potential. Valuation and view * We largely maintain our EPS estimates for FY27 and FY28. * HUVR remains focused on topline growth, backed by volume acceleration alongside new launches across categories and channels. The company has unveiled its ‘Unified India’ strategy to streamline the organizational structure, accelerating decision-making and execution. * HUVR continues to remain focused on driving volume-led revenue growth, even if it comes at the expense of near-term margins. Despite concerns around rising crude prices and macro volatility, HUL believes it is well positioned to navigate the environment through commodity hedges, accelerated cost-saving initiatives, portfolio transformation strategies, and strengthening omnichannel capabilities. Further, the company announced INR20b of capex toward premium and highgrowth categories and remains optimistic about delivering better performance in FY27 vs FY26. We reiterate our BUY rating on the stock with a TP of INR2,500 (45x on Mar’28E EPS).