HUL Q2: Analysts see near-term GST drag, recovery in H2; buy or sell?

Hindustan Unilever (HUL) posted its second quarter (Q2FY26) results on Thursday, during market hours. Analysts believe that goods and services tax (GST) cuts weighed on both revenue and margins and will continue to do so into Q3FY26. Even so, improving consumer sentiment and ongoing premiumisation leave HUL well placed for a near-term demand recovery. Overall, brokerages remain cautiously optimistic.

 

At 9:30 AM, HUL share price was trading 3.58 per cent lower at ₹2,507.75 per share. In comparison, BSE Sensex was down 0.04 per cent at 84,519.52.

Brokerages' view on HUL stock

Nuvama Institutional Equities has retained ‘Buy’ on the Hindustan Unilever stock, but has cut the target to ₹3,200 from ₹3,240 per share. 

 

 

“While GST-led transition led to 2 per cent volume impact in Q2FY26 (we are thus slightly trimming estimates), trade normalisation from Nov-25 shall support HUL’s near-term recovery (H2 to outpace H1),” the brokerage said. 

 

Similarly, Antique Stock Broking maintained ‘Hold’, and cut the target to ₹2,500 per share from ₹2,603.

 

The brokerage reckons earnings acceleration will be restricted by a lack of growth in the mass segment in large categories like skin care and skin cleansing, coupled with scale-up challenges in health food drinks. Analysts reduced FY26-28 estimates by 1 per cent to 4 per cent.   ALSO READ | Double whammy hits Colgate: GST cuts, competition weigh on Q2 sales 

Motilal Oswal Financial Services maintained ‘Buy’ on HUL stock for a target of ₹3,050 per share. The brokerage sees supportive macroeconomic factors to act as a catalyst for boosting consumption sentiment. As a market leader in most staple categories, coupled with its strategic initiatives, HUL is well-positioned to benefit the most, Motilal noted. 

 

According to Bloomberg, global brokerage Citi has also retained ‘Buy’ and has raised the target to ₹3,000 per. 

 

In its note, Citi said that although the underlying demand trends were stable, quarterly growth was adversely impacted by a temporary reduction in inventory by distributors in anticipation of the consumption tax cuts; normal trading conditions expected to resume by early-November. Further, new CEO’s articulated a strategic vision, including sharpening focus on consumer segmentation, modernising core brands to appeal to a younger demographic, and investing in high-growth demand spaces. 

 

Jefferies also continued with ‘Buy’ and hiked that target to ₹3,050 per share from ₹3,000. The brokerage noted that the GST cut impacted both revenue and margins and will continue into the third quarter, likely disappointing investors with a short-term orientation.   ALSO READ | Nuvama retains 'Hold' on Cipla, raises target after Eli Lilly diabetes deal

HUL Q2 results: Key highlights 

• The company reported a 3.6 per cent rise in its net profit in the September quarter to ₹₹2,685 crore, as compared to ₹2,591 crore a year ago, up 4 per cent. The profit was primarily driven by a one-off positive impact following the resolution of prior years’ tax matters between the UK and Indian tax authorities.
• Its revenue from operations stood at ₹16,241 crore, as compared to ₹15,926 crore year-on-year (Y-o-Y), up 2 per cent. 
• Earnings before interest, tax, depreciation and amortisation (Ebitda) came in at ₹3,729 crore, as compared to ₹3,793 crore a year ago. 
• Ebitda margin fell 90 basis points (bps) to 23.2 per cent, as compared to 24.1 per cent a year ago. 

HUL management commentary highlights:

• Priya Nair, at her first quarterly earnings conference after taking over as HUL’s managing director and chief executive officer (MD&CEO), said the company’s focus now will be on volume-led revenue growth. 
• She pointed out four areas of priority at HUL: to radically segment consumers; modernise and transform core brands; ensure its marketing and sales force keeps transforming and making them future-fit so that brands have a high discovery online and in future-fit channels; and to invest in and scale high-growth spaces.