Hindustan Unilever Ltd. share price target

Slowdown is wide spread, rural has been impacted more even as full impact of inflation and Russia Ukarine crisis is yet to play out fully We are cutting HUL's EPS estimates by 2.3/8.2/6.1% for FY22/23/24 and DCF based target price to Rs2356 (Rs2900 earlier). This follows impact of 1) deepening slowdown in demand in rural and urban India 2) likely hit on...

HUL, the largest FMCG player in India, was formed by merging three subsidiaries of Unilever in 1956

Hindustan Unilever Limited (HUL) is the largest FMCG player in India.

With its strong brand power, diversified portfolio, increasing market share and wide distribution network, the company is well positioned to deal with near-term uncertainties. Ongoing measures like grammage reduction on certain products will aid combat input cost inflation in future. We reiterate our BUY rating on the stock with a rolled forward...

For quarter ended Dec 2021, consolidated Net sales (including other operating income) of Hindustan Unilever has increased 10.33% to Rs 13439 crore compared to quarter ended Dec 2020. Sales of Home Care segment has gone up 22.97% to Rs 4,192.00 crore (accounting for 31.19% of total sales). Sales of Beauty & Personal Care segment has gone up 7.09% to Rs 5,213.00 crore (accounting for 38.79% of total sales). Sales of Foods & Refreshment segment rose 3.28% to Rs 3,466.00 crore (accounting for 25.79% of total sales). Sales of Others segment has gone up 3.65% to Rs 568.00 crore (accounting for 4.23% of total sales)....

HUL acquired GSK Consumer Healthcare's business in 2019 and integrated Horlicks and Boost brands with the foods & refreshment segment Q3FY22 Results: HUL's numbers were on expected lines....

The task (ahead) is a tough one – eye on mid-to-long-term while navigating multiple near-term challenges. Firstly, supply-side inflation of such scale amidst demand slowdown is a tough situation to be in – any price hikes (RM inflation-led) will have a visible impact on demand volume.

Maintain BUY with revised TP of Rs. 2,700 (earlier Rs. 2,900) valuing the stock at 56x FY24E EPS. At CMP, risk-reward appears fair from a long-term perspective.

HUVR's 3QFY22 result was broadly in line with our volume, sales, and gross margin estimate, but sharply lower ad spends (down 14.3% YoY and 260bp YoY as a percentage of sales) led to a 8.5-9% beat in our EBITDA, PBT, and adjusted PAT estimates. Since the largest player (also the first to report its result) has cut ad spends, it remains to be seen whether it is a harbinger of a trend that its other Staples peers also adopt to shore up margins in a difficult commodity cost environment. Two factors have held back HUVR's performance over the past few quarters...

(Ocean freight 200%, Crude oil 80%, CPO 60% and Polyethylene 40% YoY). However, we remain positive on the longer term structural story given 1) sustained market share gains 2) strong innovation pipeline 3) scale up in emerging categories (Green Tea, Fabric Conditioner, Liquid Detergents, Liquid Dishwash, Hair conditioner) and 4) distribution gains from strategies like WIMI and SHIKHAR. We expect 10.9% Sales and 13.6% PAT CAGR over FY22-24 and assign a DCF based target price of Rs 2900 (Rs 2930 earlier). We believe risk reward is favorable at 44x FY24 EPS and ~2% dividend yield. BUY....