Hindustan Unilever Ltd. share price forecast

HUL's analyst meet always gives the feeling of it being a complex business (keywords of robotics, data lakes, nanotech, many 4-letter acronyms etc.). However, this analyst walked away with higher visibility and confidence on its simple business model.

We recommend a BUY rating on the stock with a near term TP of Rs 2780, implying an upside of 10% from CMP

We have rolled over our estimates to sept-24 EPS and maintain BUY with a revised TP of Rs 2850 (sept-24 EPS) vs Rs 2,810 (56x FY24 EPS) earlier.

For Q2FY23, HUVR reported revenue of INR 1,51,440 mn (+16.1% YoY/ +3.6% QoQ). Revenue for H1FY23 was INR 2,97,680 mn (+17.9% YoY).

HUL’s 2Q results met consensus expectations; however, we were expecting more precise management responses in the results call in line with previous trends.

IndiaMART InterMESH: IndiaMART posted an in-line quarter; revenue growth remained strong at +7.1% QoQ while margins continued to remain under pressure. The investment made in sales and channel partner network is yielding results; ~8.8K suppliers were added in Q2 and the number of paying suppliers has registered 25% YoY growth. The portfolio churn has reduced across buckets and growth is driven by higher customer additions in the monthly bucket and increasing ARPU for top1/10 platinum customers. Management has indicated that it will continue to add ~8-9K suppliers per quarter. The margins will improve once the acquired customers move up the value chain (increase in ARPU). We maintain our positive stance, based on (1) improving growth visibility, led by improving cash collections; (2) investment in growth engine; (3) economic recovery leading to better MSME health; (4) higher contribution from platinum customers; and (5) margin improvement. We keep our revenue estimates unchanged and reduce EPS by ~5% due to lower margin in Q2; our TP of INR 5,400 is based on 36x FY24E EV/EBITDA (DCF implied), supported by revenue CAGR of 24% over FY22-25E. Maintain BUY. Tanla Platforms: Tanla reported better-than-expected revenue and the margin was slightly better than our estimate. The enterprise business recovered (+6% QoQ), led by volume growth, ILD price increase, and seasonality, offset by ramp-down in one large domestic account. The full effect of the ILD price increase will be visible in Q3 and the impact of the decline in the large account is over, leading the way for healthy growth in enterprise business....

Inflation is good, volatility is even better (for share gains), for larger, well-managed organisations like HUL, in our view.

ICICI Lombard: ICICI Lombard (ICICIGI) reported an in-line revenue; however, reinvestments in retail health resulted in higher-than-expected opex ratios (30.4%, +320bps vs. est.), dragging calculated CORs to 105% and APAT to INR3.5bn (8% below estimates). We expect loss ratios in the health segment to normalise during the rest of FY23, while we also expect loss ratios in motor segment to improve on the back of a growth rebound. We trim our FY23E/FY24E earnings by 6%/12% to factor in management guidance on elevated opex ratios in the near term. Given the stock's sharp correction and strong demand outlook in motor insurance, we upgrade the stock to ADD (from REDUCE), with a TP of INR1,370 (implying a Mar-24E PE of 32x and a P/ABV of 5.4x). Heidelberg Cement: We maintain our REDUCE rating on Heidelberg Cement (HEIM), with an unchanged target price of INR 180/share (8x Mar-24E EBITDA). In the absence of any major planned expansion for the next three years, we expect subdued volume growth and loss in market share to continue, as other players expand in HEIM's core markets. HEIM reported weak results due to continuous volume decline and sharp fuel cost inflation, which pulled profitability down. Reported EBITDA came in below ours and consensus estimates on higher-than-estimated costs. Volume declined 6% YoY, while adj NSR improved 10% QoQ. Thus, due to strong realisation, adj unitary EBITDA recovered 14% QoQ to INR 855/MT (down 23% YoY).The company has opted for lower tax rate from FY23. HEIM started receiving solar power under its long-term power purchase agreement...