HINDUNILVR: Attempting Rising Wedge Breakout Post Q1 FY 26

HINDUNILVR Attempting Rising Wedge Breakout: A Technical Revival Story Worth Watching Post Decent above Estimate Volume Growth and Q1 FY26 Results.

Price Action:

• Trading within a well-defined rising wedge pattern from February 2025 to July 2025
• The stock experienced a significant decline from its peak around ₹3,035 in September 2024 to a low of ₹2,136 in March 2025
• Currently trading at ₹2,521.20 with a gain of ₹83.80 (+3.44%)
• The stock appears to be attempting a breakout from the upper trendline of the rising wedge

Volume Spread Analysis:

• Volume has been relatively subdued during the consolidation phase within the wedge
• Recent sessions show increased volume activity with 5.51M shares traded, indicating renewed interest
• The volume pattern suggests accumulation during the lower levels of the wedge formation
• Volume spike accompanies the current breakout attempt, confirming the move

Key Technical Levels:

Key Support Levels:
• Immediate support: ₹2,420-₹2,450 (recent consolidation zone)
• Strong support: ₹2,300-₹2,350 (lower trendline of the rising wedge)
• Critical support: ₹2,136 (52-week low established in March 2025)

Resistance Levels:
• Immediate resistance: ₹2,550-₹2,580 (upper trendline breakout zone)
• Next resistance: ₹2,700-₹2,750 (previous swing highs)
• Major resistance: ₹3,035 (52-week high from September 2024)

Technical Patterns:
• Rising Wedge Pattern: A bearish reversal pattern that has been forming since Feb 2025
• Breakout Attempt: The stock is testing the upper boundary of the rising wedge with increased volume
• Higher Lows Formation: Despite the wedge pattern, the stock has been making higher lows since March 2025

Trade Setup:

Entry Strategy:
• Primary Entry: On sustained breakout above ₹2,550 with volume confirmation
• Secondary Entry: On pullback to ₹2,480-₹2,500 after successful breakout
• Aggressive Entry: Current levels around ₹2,520 for short-term traders

Exit Levels:
• Target 1: ₹2,680-₹2,700 (8-10% upside potential)
• Target 2: ₹2,850-₹2,900 (15-18% upside potential)
• Target 3: ₹3,000-₹3,050 (20-25% upside potential)

Stop-Loss Strategy:
• Conservative: ₹2,350 (below the rising wedge support)
• Moderate: ₹2,420 (below immediate support zone)
• Tight: ₹2,480 (for breakout trades)

Position Sizing:
• Conservative investors: 2-3% of portfolio allocation
• Moderate risk appetite: 4-5% of portfolio allocation
• Aggressive traders: 6-8% of portfolio allocation

Risk Management:
• Risk-Reward Ratio: Maintain a minimum 1:2 ratio for all entries
• Trailing Stop: Implement a 5-7% trailing stop after 10% gains
• Partial Profit Booking: Book 30% profits at Target 1, 40% at Target 2, and hold 30% for Target 3

Sectoral and Fundamental Backdrop:

FMCG Sector Overview:
• BSE FMCG index was up 1 per cent, as compared to a 0.5 per cent decline in the BSE Sensex
• The FMCG sector is showing resilience amid broader market volatility
• Rural demand recovery is expected to support sector growth in the coming quarters

Financial Performance:
• TTM Revenue: 63,928 Cr, TTM Profit: 10,827 Cr
• The company has delivered a poor sales growth of 10% over the past five years
• Annual revenue for March 2025 reached Rs 63,121 Crore, up 2%. Net profit rose 3.8% to Rs 10,671 Crore

Valuation Metrics:
• HUL's stock trades at a Price-to-Earnings (P/E) ratio around 55.70x, slightly below its historical averages (~61x over 5 years)
• Stock is trading at 12 times its book value
• Market Cap: 5,92,476 Crore (down -6.82% in 1 year)

Business Fundamentals:
• Promoter Holding: 61.9%
• Strong brand portfolio across multiple FMCG categories
• Extensive distribution network covering both urban and rural markets
• Urban markets contribute 60 per cent to HUL's sales, while rural markets comprise the rest

Recent Developments:
• Motilal Oswal analysts believe that volume growth for HUL has reached its lowest point and foresee a gradual recovery in volumes during FY25
• Brokerages tracked by Business Standard estimate HUL's net profit to decline 1.2 per cent year-on-year (Y-o-Y) on average, to ₹2,540.6 crore
• The company is expected to benefit from improving rural demand and premiumization trends

My Take:
• HUL remains a defensive play in the FMCG space with strong market positioning
• The technical breakout attempt coincides with expectations of volume recovery
• Long-term investors can consider accumulating on dips while traders can play the breakout momentum

Keep in the Watchlist and DOYR.
NO RECO. For Buy/Sell.

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Disclaimer: "I am not a SEBI REGISTERED RESEARCH ANALYST AND INVESTMENT ADVISER."
This analysis is intended solely for informational and educational purposes and should not be interpreted as financial advice. It is advisable to consult a qualified financial advisor or conduct thorough research before making investment decisions.