HUL to outgrow market, shares may rally up to 32%, says analyst. Should you buy?

In light of easing net material inflation, FMCG major Hindustan Unilever Ltd's margin profile is likely to continue to improve over coming quarters. HUL's nano factories, shop and deploy capabilities, and redesigned manufacturing and distribution network enable greater agility and flexibility. This shall result in improved customer service, better efficiencies and reduced costs.

With initiatives like this brokerage Nuvama Institutional Equities expects HUL to continue to outgrow the market. “Rohit Jawa’s appointment as MD and CEO takes effect on 27th June, and we expect him to do well,” the brokerage said.

Nuvama remains positive on HUL's ability to maintain its lead across segments and drive growth across rural and urban regions. The brokerage maintains 'Buy/So' with a target price of ₹3,365, implying a potential upside of 32 per cent from its closing price of ₹2,555.50 on Monday.

Shares of HUL were trading 0.39 per cent lower at ₹2,541.85 apiece on the NSE in Tuesday's trade. On year-to-date basis, the stock fell 0.49 per cent, while it rose about 17 per cent in the last one year.

“We expect HUL to gain market share, scale up D2C, improve margins in FY24 and premiumise portfolio (it is now 33%, up from 22% in FY12),” the note stated.

HUL continues to maintain industry leadership on the back of market development, portfolio turnaround and branding investments with premiumisation being a critical driver.

HUL is India's largest Fast-Moving Consumer Goods company, For the financial year ended on 31 March, 2022, HUL which owns power brands as Rin, Surf Excel, Dove etc has a revenue of ₹51,193 crore.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.