HINDUNILVR - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 4.1

📊 Financial Overview: Hindustan Unilever Ltd (HUL) maintains strong fundamentals with a ROCE of 27.6% and ROE of 20.6%, reflecting excellent capital efficiency. The company is nearly debt-free with a debt-to-equity ratio of 0.03. However, the P/E ratio of 55.1 and PEG ratio of 10.4 indicate significant overvaluation relative to growth. Quarterly PAT declined to ₹2,551 Cr from ₹2,839 Cr, a -2.79% QoQ drop, though underlying sales grew 2% YoY with an EBITDA margin of 23.2%

HUL Homepage

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💼 Business Model & Competitive Edge: HUL is India’s largest FMCG company with a diversified portfolio across home care, beauty, and food segments. Its wide distribution network, strong brand equity, and pricing power provide a durable competitive advantage. The company continues to invest in innovation and digital transformation, positioning itself for long-term growth despite short-term headwinds like GST changes and monsoon disruptions

HUL Homepage

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📉 Valuation & Entry Zone: Trading below its 50 DMA (₹2,537) and 200 DMA (₹2,475), HUL is currently in a consolidation phase. With RSI at 37.5 and MACD at -14.0, the stock appears oversold. A good entry zone would be between ₹2,350–₹2,400, offering a favorable long-term accumulation opportunity.

📈 Long-Term Holding Guidance: HUL remains a strong long-term hold due to its resilient business model, consistent cash flows, and leadership in the FMCG sector. Investors should monitor margin recovery and rural demand trends for future performance.

✅ Positive

• High ROCE and ROE reflect strong operational efficiency
• Debt-free balance sheet enhances financial stability
• Strong brand portfolio and distribution network
• FII holdings increased by 0.61%

⚠️ Limitation

• High P/E and PEG ratios suggest overvaluation
• Quarterly PAT declined by 2.79%
• MACD and RSI indicate weak momentum

📉 Company Negative News

• EBITDA margin declined 90 bps YoY due to higher investments

  HUL Homepage

• Flat volume growth impacted by GST changes and prolonged monsoon

  HUL Homepage

📈 Company Positive News

• Underlying sales grew 2% YoY in Q2 FY25

  HUL Homepage

• Dividend of ₹19/share declared for the quarter

  HUL Homepage

• One-off tax resolution boosted PAT by 4% YoY

  HUL Homepage

🏭 Industry

• FMCG sector benefits from rising disposable income and urbanization
• Industry P/E of 52.2 reflects premium valuations for consumer staples
• HUL remains a benchmark for operational excellence in the sector

🧾 Conclusion

HUL is a fundamentally strong FMCG leader with consistent profitability and a resilient business model. While current valuations are rich, recent price correction and technical indicators suggest a good long-term entry near ₹2,350–₹2,400. Investors should watch for margin recovery and rural demand revival.

Sources

HUL Q2 FY25 Results – Unilever India

HUL Homepage

HUL Share Price Target 2025–2035 – StockPriceArchive

stockpricearchive.com