Shares of fast-moving consumer goods major Hindustan Unilever (HUL) opened 5% lower on Thursday after the company’s second-quarter results marginally missed analysts estimates.

What Happened: HUL’s standalone net profit fell 3.9% year on year to ₹2,612 crore in the September quarter, whereas the company’s revenue from operations stood at ₹15,508 crore, a 1.5% from the year-ago period.

The board has also decided to separate the ice cream business, the company said in its statement. It will determine the mode of separation by the end of this year.

Brokerage Views: JPMorgan said in the second quarter, the fast-moving consumer goods giant’s revenue and EBITDA were below its estimates, primarily due to a miss in volume growth which came in at 3% compared to the expected 4%, even as EBITDA margin met expectations.

It sees a slowing urban demand posing challenges for the firm’s near-term outlook, although pricing strategies and market shares remain strong. As a result, the brokerage has lowered its earnings per share estimates for FY25-26 by 3%. JPMorgan maintained an “overweight” rating on the stock but cut its target price to ₹2,870.

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Morgan Stanley said the company reported weak headline volume growth of 3%, falling short of its estimates due to a slowdown in urban demand. The personal care and foods and refreshments (F&R) categories continue to hinder the company’s growth prospects.

With current inflation levels in tea and palm oil, low single-digit price growth is anticipated in the third quarter, it added. The brokerage has an “underweight” rating on the company with a target price of ₹2,110.

Jefferies said that the firm’s second-quarter results were in line with its expectations, showing a year-on-year urban volume growth of 3% amid demand pressures. The home care segment reported strong revenue and EBITDA growth, whereas the beauty and wellbeing category was modest, with declines noted in personal care and foods, it noted. Jefferies has a “buy” recommendation for the stock with a target price of ₹3,130.

HDFC Institutional Research said that the results were marginally below its expectations as performance in personal care and food and refreshments segments missed estimates. However, the brokerage believes the worst is over regarding muted volume growth, pricing corrections and rural weakness.

The brokerage sees HUL achieving annual revenue growth of 6%, with EBITDA growth at 8% and profit ticking up at 8% over the FY24-27 period. HDFC has a “buy” rating on the stock with a target price of ₹3,200.

Price Action: HUL’s shares were down 4.5% to ₹2,539.55 on Thursday morning.

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