HINDUNILVR - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 3.8

📊 Core Financials:

- Quarterly PAT at ₹2,551 Cr vs ₹2,839 Cr previously → slight decline.

- Strong profitability with ROCE at 27.6% and ROE at 20.6%.

- Debt-to-equity ratio at 0.03 → virtually debt-free.

- Cash flows remain healthy, supported by consistent earnings and dividend yield of 1.89%.

💹 Valuation Indicators:

- Current P/E: 51.0 vs Industry P/E: 45.6 → trading at a premium.

- P/B ratio: ~11.0 (₹2,282 / ₹208) → expensive.

- PEG ratio: 9.60 → indicates stretched valuation relative to growth.

- Intrinsic value appears lower than CMP, suggesting overvaluation.

🏢 Business Model & Competitive Advantage:

- Hindustan Unilever (HUL) is India’s largest FMCG company with a diversified portfolio across personal care, food, and household products.

- Competitive advantage lies in brand leadership, distribution reach, and strong consumer loyalty.

- Market cap of ₹5,36,130 Cr reflects scale and dominance in FMCG sector.

📈 Entry Zone & Long-Term Guidance:

- CMP ₹2,282 is below DMA 50 (₹2,345) and DMA 200 (₹2,355), showing short-term weakness.

- RSI at 36.6 and MACD negative → near oversold zone.

- Suggested entry zone: ₹2,150–₹2,250.

- Long-term holding recommended due to strong fundamentals and brand power, though valuations remain stretched.

Positive

• Strong ROCE (27.6%) and ROE (20.6%).
• Debt-free balance sheet (Debt-to-equity 0.03).
• Attractive dividend yield of 1.89%.
• FII holdings increased by 0.61%.

Limitation

• High P/E (51.0) compared to industry average (45.6).
• P/B ratio ~11.0 indicates premium valuation.
• PEG ratio of 9.60 suggests overvaluation relative to growth.
• Quarterly PAT declined from ₹2,839 Cr to ₹2,551 Cr.

Company Negative News

• DII holdings reduced by -0.37%.
• Quarterly profit variation at -2.79% indicates margin pressure.

Company Positive News

• FII holdings increased by 0.61%.
• Strong brand portfolio continues to drive market leadership.

Industry

• FMCG industry remains resilient with steady demand across categories.
• Industry P/E at 45.6 indicates sector is moderately valued compared to HUL’s premium valuation.

Conclusion

⚖️ Hindustan Unilever is financially strong with excellent return ratios, debt-free balance sheet, and consistent dividend payouts. However, valuations are stretched with high P/E, P/B, and PEG ratios. Entry is favorable around ₹2,150–₹2,250 for long-term investors, with potential for sustained growth driven by brand leadership and consumer demand.