Synopsis : Nuvama remains bullish on Hindustan Unilever, citing accelerating growth, premium product launches, expanding D2C brands, and strong digital momentum. The brokerage has retained its Buy rating with a target price of ₹3,090.
Hindustan Unilever (HUL) has once again emerged as one of Nuvama’s preferred picks in the FMCG space, with the brokerage maintaining its Buy rating and target price of ₹3,090, implying an upside potential of nearly 40%.
According to the brokerage, HUL’s growth trajectory has strengthened steadily over recent quarters, supported by premiumisation, strong performance from digital channels, and increasing contributions from its direct-to-consumer brands.
Growth momentum continues to improve
Nuvama highlighted a clear improvement in HUL’s revenue growth trend during FY26.
Revenue growth increased from 3% year-on-year in the first half of FY26 to 5.7% in the third quarter and further accelerated to 7.6% in the fourth quarter, marking the strongest quarterly growth rate in the last 12 quarters.
The brokerage expects this momentum to continue into FY27.
Nuvama projects Q1FY27 revenue growth of 9-10% year-on-year, supported by volume growth of 6-7% and pricing growth of around 2-3%.
The improving growth trajectory reflects strengthening consumer demand and the success of HUL’s product and channel strategies.
Premiumisation remains a key growth engine
A major pillar of HUL’s strategy is its increasing focus on premium categories.
Over the past year, the company has introduced several premium offerings across beauty, nutrition, wellness, and personal care segments.
These include Dove Peptide products, Horlicks Protein Shake, Horlicks Pro Fitness, Closeup White Now, and Lipton Metabolism Boost Effervescent Tablets.
Nuvama believes premium products will continue to play an important role in driving revenue growth and improving profitability over the medium term.
The brokerage sees premiumisation as one of the strongest structural growth opportunities for the company.
D2C brands are scaling rapidly
HUL’s investments in direct-to-consumer brands are also beginning to show results.
According to Nuvama, wellness brand OZiva has grown nearly fourfold over the past three years.
The brokerage also highlighted the strong performance of skincare brand Minimalist, which continued to deliver double-digit growth during the year of acquisition.
These brands are helping HUL strengthen its presence in high-growth segments such as health supplements, wellness products, and premium skincare.
Their expanding contribution is expected to support both growth and portfolio diversification.
Digital channels continue to gain traction
Changing consumer buying habits have become another major tailwind for HUL.
The brokerage noted that e-commerce revenue grew 25% year-on-year during FY26, while quick-commerce sales doubled over the same period.
Growth across online platforms reflects increasing consumer preference for convenience-led shopping and faster delivery models.
Nuvama also pointed to continued expansion in modern trade channels, which are contributing to HUL’s distribution and revenue growth.
The company’s strong presence across both traditional and digital channels positions it well to capture evolving consumption trends.
Profitability and return ratios remain healthy
While HUL continued to invest in growth initiatives, profitability remained resilient.
The company reported an EBITDA margin of 23.6% during FY26, remaining within management’s guided range despite a modest year-on-year decline.
Return ratios improved further during the year.
Return on Equity increased to 22.1% from 20.5% a year earlier, while Return on Capital Employed rose to 29.3%.
The brokerage believes HUL’s strong cash generation capabilities and efficient capital allocation continue to support shareholder value creation.
Key risk remains rural demand
Despite its positive outlook, Nuvama highlighted one important risk factor.
The brokerage noted that the possibility of El Niño-related weather disruptions could affect rural consumption trends during the second half of the year.
Any adverse impact on agricultural output or rural incomes could temporarily moderate demand growth in key consumer categories.
However, Nuvama believes HUL’s diversified product portfolio, premiumisation strategy, and growing digital presence provide sufficient support to offset potential near-term challenges.
Conclusion
Nuvama’s bullish stance on Hindustan Unilever is driven by accelerating revenue growth, expanding premium product offerings, rapid scaling of D2C brands, and strong momentum across e-commerce and quick-commerce channels.
While rural demand remains a factor to monitor, the brokerage believes HUL is well positioned to deliver sustained growth and margin resilience, making it one of its preferred FMCG investment ideas.
Disclaimer: The views, ratings, and target prices mentioned in this article are based on brokerage research reports and are intended solely for informational purposes. They should not be construed as investment advice or recommendations to buy, sell, or hold any security. Investors should conduct their own research and consult a SEBI-registered financial advisor before making investment decisions.
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