Hindustan Unilever (HUL) shares are finally seeing some green after a prolonged slump. On Tuesday, February 25, 2025, the FMCG giant’s stock rose by 0.76 percent to Rs 2,259.25 on the BSE, marking its second consecutive day of gains. This comes after a 5-day losing streak on the NSE, where the stock had shed nearly 4 percent. But is this a sign of recovery or just a temporary bounce? Let’s dive deeper.
HUL’s stock has been under pressure for months, plummeting 26 percent from its all-time high of Rs 3,034.5 recorded on September 23, 2024. The broader Nifty FMCG index hasn’t fared much better, falling over 21 percent during the same period. In fact, the Nifty FMCG’s weightage in the Nifty50 index has dropped to 9.5 percent, its lowest since 2011, as FMCG stocks lose their defensive appeal.
The FMCG sector, including HUL, has been hit hard by muted consumer demand and rising input costs. Rajesh Sinha, Sr. Research Analyst at Bonanza Portfolio, noted that this is the first time in 20 years that FMCG stocks are underperforming so significantly. The Nifty FMCG index has fallen 20.2 percent since September 2024, outpacing the Nifty 50’s 12.6 percent decline.
Despite the challenges, HUL’s Q3FY25 earnings offered some relief. The company reported a 19 percent year-on-year jump in standalone net profit to Rs 3,001 crore, beating estimates. Sales also grew 2 percent to Rs 15,195 crore. While these numbers are encouraging, they haven’t been enough to fully offset investor concerns about inflation and weak demand.
Brokerages like BoB Capital Markets and KR Choksey are betting on HUL’s long-term potential. BoB Capital reiterated its ‘Buy’ call with a target price of Rs 2,859, citing strong rural exposure and premiumization trends. KR Choksey also maintained an ‘Accumulate’ rating, with a target of Rs 2,610, highlighting HUL’s strategic acquisitions and premiumization efforts as key growth drivers.
While the recent rally is a positive sign, HUL’s recovery hinges on a broader revival in consumer demand and easing inflation. For now, investors are cautiously optimistic, hoping that the worst is behind them.
What do you think? Is this the start of a turnaround for HUL, or are there more challenges ahead? Let us know your thoughts!