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This is not related to Hilt but to its androidx.fragment dependency. Hilt has been trying to keep up with the bug fixes in Fragment's new state manager and is currently depending on version 1.3.2 and its likely upgrading your fragment dependency which is likely the culprit of the issue.
If you remove the Hilt dependency out of your sample project and depend on Fragment 1.3.2 you'll observe the same issue. I recommend you file a bug to the Navigation folks here, they also work on Fragments.
As a workaround you can excludeandroidx.fragment from Hilt's transitive deps via Gradle, with something like this:
Latest release of Dagger.Hilt 2.34 has introduced a bug that manifests itself during navigation.
I have created a simple project that reproduces the issue, here: https://github.com/lukas1/Hilt-Navigation-Issue/tree/master
If you change in the project the version of Dagger.Hilt to 2.33, the animation behaves as expected.
Expected animation:
Actual animation:
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