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Investing.com - Goldman Sachs has upgraded Hindustan Unilever (NSE:HLL) Ltd (NSE:HUVR) from Neutral to Buy and raised its price target to INR2,900.00 from INR2,400.00, citing expectations of sustained volume growth recovery.
The investment bank noted that Hindustan Unilever’s volume growth moderated after the first quarter of fiscal year 2025, when the company delivered 4% volume growth, and bottomed out at 0% in the third quarter of FY25. Goldman Sachs observes a gradual recovery since then, which it expects to continue over the next few years.
This recovery is attributed to macro tailwinds, including low food inflation and accelerating rural wages driving improved mass consumption. The firm also highlighted positive impacts from Hindustan Unilever’s initiatives on specific brands that had been struggling, including packaged tea, Horlicks, Glow & Lovely, and Lifebuoy.
Goldman Sachs forecasts Hindustan Unilever’s revenue growth to accelerate to high single digits in the second half of FY26 and throughout FY27. The firm also expects EBITDA margins to recover once revenue growth picks up, driven by operating leverage on fixed costs and advertising spend.
The investment bank raised its target multiple to 55x P/E from 50x, in line with the 5-year average, while identifying key risks to its Buy rating as a sharp increase in input costs and potential worsening of the macro environment for mass consumption.
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