Shares of HUL closed at ₹2,655.7, down 1.08% in a weak market on Thursday. The stock has delivered 12.5% returns since January this year.
The brokerage house expects HUL’s earnings per share to rise 13% and values the stock at 60 times its September 2024 earnings, slightly higher than its five-year average to arrive at its base-case target price.
“Rural has bottomed out and industry reports already point to a stable demand trend,” the brokerage said in a note to clients. “The festive season also helped, so need to wait for a few months for a clear trend. Macro factors like rise in farm income, reasonable monsoon in 2022, gov’t focus etc. should help in the medium term.”
Jefferies’ most optimistic price target on is ₹3,470, implying an upside of 29% from the current levels. In its bullish case, Jefferies forecasts a 14% annual growth in revenues over FY22-25
Jefferies said even as rising raw material costs remain a concern this fiscal, HUL has good pricing power to offset input cost pressure over the medium term.
“Revenue growth is supported by a strong acceleration in discretionary categories, as rural demand recovers. Input inflation is short-lived and HUL is able to mitigate it through its pricing power,” it said.
