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Emkay Capital has retained an ADD rating on Hindustan Unilever (HUL), with a current market price (CMP) of Rs 2,602 and a target price (TP) of Rs 2,700 by September 2026, valuing the stock at 52x P/E.The brokerage said the company's new leadership appears more deliberate and focused on evolving consumer needs—a factor that previously contributed to HUL’s growth slowdown.New Leadership Drives Volume-Led GrowthUnder CEO Priya Nair, HUL is prioritizing volume-led value growth, which the management believes will help sustain and improve margins. Nair has laid out four strategic pillars: consumer segmentation, brand desirability, leveraging marketing muscle, and making fewer but bigger bets. “New leadership calls for an obsession with volume-led value growth,” Emkay noted.The company expects H2FY26 volume growth to outpace H1, aided by multiple external tailwinds and favorable market conditions. E-commerce currently contributes around 8% of revenue, and HUL plans to increase focus in this channel. Nutrition and well-being segments are highlighted as key future growth areas.Margins to Stay Within 22-23% GuidanceHUL continues to manage cost inflation versus pricing, which has resulted in sequential gross-margin recovery of 130bps. In Q2, the company reported an operating profit margin (OPM) of 23%, slightly down 90bps from expectations, while advertising and promotion spend rose 10%, impacting margins by ~80bps.Emkay highlighted that divestment of the ice-cream business could provide an additional 50-60bps boost, as it was a low-margin segment. Near-term guidance for margins remains between 22-23%, with execution being the key determinant for performance.Valuation Hinges on ExecutionThe brokerage expects HUL’s forward P/E at 53x, close to its five-year historical average. “Improved execution is key for the company toward fully capitalizing on sector tailwinds,” Emkay said, noting that gains so far have been partially offset by headwinds in certain segments. Given the limited upside, Emkay has maintained its ADD rating.Read More - Trump Says ‘I’d Like China To Help Us Out’ In Managing Russia Ties
