JPMorgan has revised its price target for Hindustan Unilever (LON:ULVR) Ltd (HUVR: IN), reducing it to INR2,870 from the previous INR2,950.
Despite the adjustment, the firm maintains an Overweight rating on the stock. The revision follows Hindustan Unilever's recent financial performance, which showed a slight deviation from JPMorgan's expectations, with second-quarter revenue and EBITDA coming in approximately 1% and 1.5% below projections, respectively.
The company's volume growth was reported at 3%, which is 1% lower than JPMorgan's forecast of 4%, although the EBITDA margin aligned with expectations. Hindustan Unilever's underlying revenue growth stood at 3%, with stable pricing.
The management has expressed a cautious stance on the near-term demand outlook, adjusting it to "stable" from "gradually improving," primarily due to a slowdown in urban markets, which account for two-thirds of the company's revenue.
Amidst these challenges, pricing strength and market share gains are noted as positive factors. Hindustan Unilever is experiencing firming pricing growth, anticipating low single-digit growth, driven by price increases in tea and soaps.
These adjustments are expected to bolster revenue growth in the second half of the year. Additionally, market share trends are improving, surpassing initial expectations, with the premium product mix and organized trade/e-commerce channels outperforming across various categories.
In terms of margin outlook, Hindustan Unilever anticipates maintaining its margins in the near term. This is attributed to strategic pricing adjustments that are set to counteract raw material inflation.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.