ICICI Securities Recommends Buying Hindustan Unilever, Targets Price of Rs 2,800

Hindustan Unilever Poised to Navigate Commodity Inflation Cycle

As early signs of commodity inflation return to the FMCG basket, ICICI Securities believes Hindustan Unilever (HUL) is structurally better positioned to navigate the cycle. Historically, inflationary environments allow large players to flex their pricing power, driving positive price-led growth. Although this could weigh on near-term margins, given the lag between commodity inflation and price hikes, ICICI Securities believes HUL has levers to drive operating leverage primarily through tactical rationalisation of ad spends. Furthermore, inflationary pressures disproportionately squeeze the unit economics of smaller, regional players, paving the way for large companies like HUL to capture incremental volume share.

Key Monitorables for HUL

The research report highlights two key monitorables for HUL: the underlying consumer volume trajectory and the elasticity of demand as these price hikes are absorbed at the retail level. These factors will play a crucial role in determining the company's ability to navigate the commodity inflation cycle.

Read also: Elitecon International Share Price Surges 5% Amid Broader Market Decline

Revised Estimates and Target Price

ICICI Securities adjusts its earnings per share (EPS) estimates for Hindustan Unilever by -0.3%/1.2% for FY27/28E. The research report models revenue/EBITDA/PAT compound annual growth rate (CAGR) of 10%/11%/10%, respectively, over FY25–28E. The target price for HUL has been revised to INR 2,800 (INR 2,700 earlier) based on a discounted cash flow (DCF) valuation.

Valuation Multiple

At the target price, Hindustan Unilever trades at a price-to-earnings (P/E) ratio of 49x on Mar'28E EPS.

Read also: Havells India Shares Decline 6% Following Disappointing Q4 Earnings, Brokerages Adjust Target Prices

Recommendation

ICICI Securities maintains a BUY recommendation for Hindustan Unilever.