Hindustan Unilever reported a strong Q2 performance with revenue growing 15.2% YoY to Rs 17,399 crore, fueled by a robust 7% volume growth. While net profit climbed 11.5% to Rs 2,844 crore, the company faced margin pressure with EBITDA margins contracting by 114 bps to 22.6%. Brokerages have upgraded the stock to 'BUY' with a target price of Rs 2,120, citing favorable risk-reward ratios and improving rural demand.
Hindustan Unilever Q2 Profit Up 11.5%, Brokerage Upgrades Stock to BUY
Revenue grew 15.2% YoY to Rs 17,399 Cr; EBITDA margins contracted by 114 bps to 22.6%.
Reader Takeaway: Volume-led growth signals rural recovery, though persistent raw material inflation continues to squeeze operating margins.
What just happened
Hindustan Unilever (HUL) released its Q2 FY27 earnings, reporting a net profit of Rs 2,844 crore, representing an 11.5% increase year-on-year. The company’s revenue saw a double-digit uptick of 15.2% to Rs 17,399 crore. A significant highlight was the 7% volume growth, which marks the company's strongest expansion in 14 quarters. Following these results, brokerages have upgraded the stock to a 'BUY' rating with a target price of Rs 2,120.
Why this matters
The results underscore a shift toward volume-led growth, driven largely by rural consumption recovery and successful premiumization strategies. While the top-line performance is robust, the bottom line is feeling the heat of input cost inflation. Gross margins dropped 394 bps to 46%, leading to a compression in overall EBITDA margins. The market is weighing the company’s ability to pass on these costs through calibrated pricing without hurting its newly regained volume momentum.
Segment Performance
- Home Care: Strongest performer with 21.4% underlying sales growth, supported by fabric and household care.
- Beauty & Wellbeing: Delivered 13% sales growth, with hair and skin care segments acting as the primary drivers.
- Foods: Reported 9% sales growth, bolstered by double-digit performance in lifestyle nutrition and packaged foods.
Risks to watch
Margin volatility remains the primary concern. Investors should closely monitor raw material inflation, which has consistently pressured EBITDA margins. Additionally, competitive intensity in the FMCG space and a slower-than-expected recovery in urban demand pose potential risks to sustained margin expansion.
What to track next
Watch for management’s commentary on input price moderation in the coming quarters. Success in maintaining the 7% volume growth rate while navigating price hikes will be critical for the stock’s valuation trajectory.