Hindustan Unilever Ltd. (HUL) recently hosted its Capital Markets Day, where CEO Priya Nair outlined strategies for reinvigorating growth following several years of uninspiring performance. A key takeaway from the event was the absence of specific FY27 guidance, notably the withdrawal of previous double-digit earnings per share (EPS) growth projections.
Guidance Revisions and Strategic Focus
During the event, HUL revised its operating profit margin (OPM) band to 22-24 percent, an adjustment from the earlier 22.5-23.5 percent. Capital expenditure guidance also saw an increase, moving to 3 percent of sales from the prior 2 percent.
Priya Nair detailed a multi-pronged strategy to drive future expansion:
- 40% Growth from Consumption: This involves boosting usage and premiumization by offering enhanced product benefits.
- 40% Growth from Market-Making: The aim is to attract more users to HUL's diverse portfolio.
- 20% Growth from Portfolio Pivoting: This focuses on entering high-growth new white spaces and adopting innovative formats.
The company reported a turnover of Rs 63,800 crore in FY26, with 21 brands each surpassing the Rs 1,000 crore mark. Over 90 percent of this turnover originates from categories where HUL holds a number one market position, reaching 90 lakh outlets and serving 9 out of 10 Indian households annually.
HUL management expressed optimism about navigating challenges like rising crude prices and macro volatility through commodity hedges, accelerated cost-saving initiatives, portfolio transformation, and stronger omnichannel capabilities.
Analyst Reactions and Stock Targets
Following the Capital Markets Day, several brokerage firms updated their ratings and price targets for HUL shares:
- CLSA: Maintained a 'Hold' rating with a target of Rs 1,804.
- Investec: Also suggested 'Hold' with a target of Rs 2,210.
- JPMorgan: Rated HUL 'Overweight' with a target of Rs 2,425.
- UBS: Recommended 'Buy' with a target of Rs 2,700.
- Nomura: Issued a 'Buy' rating and a target of Rs 2,450, noting that execution, consumer acceptance, and the time taken to uplift growth remain crucial.
- Antique Stock Broking: Suggested 'Buy' with a target of Rs 2,214.
- MOFSL: Reiterate a 'Buy' rating with a target price of INR 2,400, based on 40x on Sep’28E EPS, noting HUL's continued focus on volume-led revenue growth.
While analysts acknowledged the pragmatic approach to addressing past challenges, the lack of specific growth guidance for FY27 left some questions regarding the timeline for the anticipated growth uplift.