HUL Shares Drop 3% Post Q2 Results; Brokerages Expect Gradual Recovery

HUL Shares Slide After Q2 Performance

Shares of Hindustan Unilever Ltd (HUL) fell more than 3 percent on Friday, making it one of the top losers on the BSE Sensex, following the company’s Q2 FY26 results.

HUL posted a 4 percent year-on-year rise in consolidated net profit to ₹2,694 crore, aided by a one-off tax gain. However, the market reaction reflected investor caution as trading conditions continue to stabilise post the GST transition.

The stock opened at ₹2,525, down from the previous close of ₹2,601.6, reflecting profit booking and cautious sentiment despite the firm posting positive quarterly earnings.

Quarterly Performance: Stable Revenue, Margin Pressure

HUL reported revenue from operations of ₹16,061 crore, up 2 percent year-on-year, with underlying sales growth of 2 percent and flat volumes.

The EBITDA margin slipped 90 basis points to 23.2 percent, reflecting temporary GST-related disruptions and higher business investments. The reported net profit was boosted by a ₹184 crore one-off tax gain, though earnings before exceptional items fell 4 percent compared to the same quarter last year.

HUL management highlighted that despite transitory disruptions, the company’s performance remained competitive. CEO Priya Nair emphasized operational resilience, while CFO Ritesh Tiwari noted that margins should remain stable in Q3, with normal trading conditions expected to return in November.

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Brokerage Views: Mixed Calls on HUL Stock

Brokerages have issued divergent recommendations on HUL shares, reflecting cautious optimism on gradual recovery:

• Morgan Stanley assigned an Equal-Weight rating with a target price of ₹2,335, noting that Q2 volumes were impacted by GST transition by around 2 percent, but trading conditions are expected to normalise by early November. The brokerage expects the trade pipeline to return to the 4–6 weeks range and highlighted stable demand across urban and rural markets. They also flagged the potential margin contribution from the proposed ice-cream demerger, estimated at 50–60 basis points.

• Goldman Sachs issued a Buy rating with a target price of ₹2,850, noting that Q2 results were largely in line with expectations. The brokerage expects gradual growth recovery in H2 FY26, with a focus on volume-led revenue growth under CEO Priya Nair’s leadership.

• CLSA recommended an Underperform rating with a target price of ₹1,966, citing challenges in achieving robust volume growth across segments. CLSA highlighted that while the home care segment saw growth driven by liquids and the beauty segment performed strongly in skincare, personal care volumes declined. The foods segment grew 3 percent YoY with low single-digit underlying volume growth.

Segment-Wise Insights

• Home Care: Growth primarily led by liquid products, while price growth remained negative.

• Beauty & Personal Care: Skincare performed well, but personal care volumes showed a decline.

• Foods: Revenue increased 3 percent YoY, with low single-digit volume expansion.

Analysts highlighted that HUL continues to focus on portfolio renovation, cost optimisation, and volume-led strategies to drive medium-term growth.

Management Guidance: Stable Margins and Gradual Recovery

HUL management guided for stable margins and low single-digit price growth in the second half of FY26. Brokers expect stronger performance in the December quarter, driven by normalising trading conditions and seasonal demand during the festive period.

Despite short-term price volatility, analysts see medium-term growth potential under the new CEO, Priya Nair, who is emphasising:

• Volume-led revenue growth

• Operational efficiency

• Portfolio optimisation

• Strategic investments in high-growth segments

Conclusion: Gradual Recovery Expected

HUL’s Q2 FY26 results show resilience amid temporary disruptions, with revenue growth and stable margins supporting medium-term optimism.

Brokerage calls remain mixed, reflecting both cautious short-term outlook and long-term confidence in the company’s strategy to drive volume-led revenue and operational efficiency.

While HUL shares fell over 3 percent on Friday, analysts believe the stock could recover gradually as market conditions stabilise and festive-season demand supports growth.

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