HUL declines 5% as brokerages turn cautious post Q2 show

Shares of Hindustan Unilever Ltd ( HUL) slipped 4.8% in early trade on Friday, October 24, to their day’s low of Rs 2,475.20 on the BSE after the FMCG major reported a 3.6% year-on-year rise in consolidated net profit for the September quarter, following which, brokerage firms turned cautious on the stock, stating concerns over margin pressure.

The Q2 FY26 performance, though modestly positive, came against the backdrop of a one-off tax gain, while operational performance remained subdued due to GST-led transitions.

HUL reported a consolidated net profit of Rs 2,685 crore for Q2 FY26, compared to Rs 2,591 crore in the year-ago period. The company attributed the increase in profit primarily to a one-time exceptional gain of Rs 273 crore, resulting from the resolution of historical tax matters between UK and Indian authorities.

Without this one-off gain, the core profitability saw limited expansion. HUL’s revenue rose 0.6% year-on-year, while EBITDA margins declined 90 basis points to 23%, impacted by GST-related price cuts across a significant portion of its portfolio.

Here’s what brokerage firms are saying:


Goldman Sachs: Buy| Target price: Rs 2,850


Goldman Sachs maintained a ‘Buy’ rating on HUL but lowered its target price to Rs 2,850 from Rs 2,900. The brokerage highlighted that revenue rose 0.6% YoY, while EBITDA declined 2.3%, with margins at 23.1%, slightly below their estimate of 23.4%. The firm noted that the GST cut on 40% of HUL’s portfolio led to price reductions in approximately 1,200 SKUs, triggering short-term destocking. While Goldman Sachs expects a recovery in Q3FY26, it noted the rebound could be slower than earlier anticipated. It also cut FY26–28 EPS estimates by 2–3%, projecting EBITDA margins to remain between 22–23% in the second half of FY26.

Nuvama: Buy| Target price: Rs 3,200


Nuvama retained its ‘Buy’ rating and raised its target price to Rs 3,240 from Rs 3,200, despite acknowledging short-term headwinds. The firm expects HUL’s EBITDA margins to rise by 50–60 basis points in Q3 post the demerger of its ice-cream business, with steady guidance maintained at 22–23%. Nuvama attributed a 2% volume impact in Q2 to the GST-led transition but sees trade normalisation from November onwards aiding a stronger H2 performance. The brokerage anticipates H2FY26 to outpace the first half in terms of recovery.

Citi: Buy| Target price: Rs 3,000


Citi also maintained its ‘Buy’ rating with a target price of Rs 3,000 (vs Rs 2,900 earlier). It said HUL’s Q2 results were slightly ahead of expectations, with revenue growing 2% and EBITDA margin at the higher end of guidance at 23%. Citi attributed quarterly softness to temporary de-stocking due to GST rate anticipation, estimating a 200 bps impact. It expects normal trading to resume by early November. The brokerage noted strong volume performance in home care, skin care and colour cosmetics, while other categories like tea, hair care, and oral care faced GST-related challenges. Citi projected 8–9% revenue/EPS CAGR for FY25–28 and made only marginal earnings tweaks (<1%).

Elara: Accumulate| Target price: Rs 2,780


Elara Capital maintained an ‘Accumulate’ rating on HUL and set a target price of Rs 2,780. The firm remains cautiously optimistic, supported by a favourable macro environment and volume-led growth strategies. Elara flagged rural recovery as a key variable, while acknowledging that GST disruption may persist into October. It expects recovery from early November to boost second-half growth. While the firm retained its EBITDA margin guidance at 22–23%, it noted a 90 bps year-on-year decline in Q2 margins to 23%, though still 40 bps ahead of estimates. Elara expects the ice-cream demerger to add a further 50–60 bps to margin in upcoming quarters.

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( Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)