Hindustan Unilever Ltd. share price target

Most consumer categories remained under pressure in 3Q and recovery seems more gradual for the sector. HUL's management of the situation is far superior to peers. Home Care and F&R are driving both revenue and profitability. BPC is seeing various challenges as BPC volume market degrew by 2% in 3Q. GSK's acquisition is running behind schedule and is expected to be integrated by Mar-20 (vs. Dec-19 earlier). We maintain our NEUTRAL rating as we don't see any near-term triggers for re-rating the stock. HULs 3QFY20 show was respectable amidst challenges of slowdown. Co maintains a cautious near term outlook and is hopeful for gradual recovery in rural demand. Net revenue growth of 4% with 5% UVG was better than many consumer companies despite large scale. Marico/Colgate/Dabur posted domestic volume growth of -1/2.3/5.6%. We are admirers of HULs superior capabilities in managing tough times. We value HUL at 45x on Dec-21 EPS with TP of Rs 1,988. Maintain NEUTRAL.

Home care, F&R; maintain growth; personal care declines Home care segment continued its resilient performance with revenue growth of 9.8% YoY driven by strong premiumisation led growth in fabric wash & household care. Food & refreshment (F&R;) segment increased 7.9% YoY led by good growth in beverages segment. Personal care witnessed a decline of 2.8% YoY due to delayed winter impacting skin care category and price cuts of ~6% taken in the soaps category to resort to intense competitive pressure in the segment. The demand outlook continues to be...

Hindustan Unilever (HUVR) has reported broadly an in-line performance in 3QFY20 with betterthan-expected operating performance. However, its underlying volume growth at 5% YoY continued to remain sluggish (broadly in-line with our 4% estimate), as demand environment continued to remain weak, marked with sharp slowdown in rural and discretionary spend. Pricing declined by 1% YoY led by: (1) impact of price cuts undertaken in personal wash category; (2) negative leverage due to slowdown in Skin-care portfolio; and (3) pricing actions relating to general competition. Healthy improvement in margin was the key quarterly takeaway, led by continued cost saving measures. Historically, HUVR has demonstrated its ability to tide over consumption slowdown with focus on driving premiumisation, innovation and efficient supply...

We are increasing FY21 and FY22 EPS estimates by 3.7% and 4.6% following better than expected margin expansion and 5% volume growth in a highly challenging operating environment. HUL is cautious on near term volume growth even as it continues to invest behind long term strategic levers led by expected uptick in Rural demand (favorable rainfall, higher crop prices due to food inflation and benefit of DBT), structural urban drivers like categories...

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Rural demand continued to remain sluggish in India with rural sales moderating to 0.5x urban sales in Q2FY2020. Demand in rural India continues to remain slow due to lower income in the hands of the rural population. In view of sustained slowdown in rural India, Unilever PLC has reduced its revenue guidance for CY2019 and H1CY2020. (Hindustan Unilever Limited's [HUL] contribution is higher in Unilever's Asia-Pacific region). HUL's management also indicated in the Q2FY2020 conference call that slowdown is expected to persist and recovery in demand would...

Rural demand continued to remain sluggish in India with rural sales moderating to 0.5x urban sales in Q2FY2020. Demand in rural India continues to remain slow due to lower income in the hands of the rural population. In view of sustained slowdown in rural India, Unilever PLC has reduced its revenue guidance for CY2019 and H1CY2020. (Hindustan Unilever Limited's [HUL] contribution is higher in Unilever's Asia-Pacific region). HUL's management also indicated in the Q2FY2020 conference call that slowdown is expected to persist and recovery in demand would...

12 December 2018 The demand scenario is similar to last quarter with no major improvement or deterioration. Rural demand has seen slight sequential slowdown. The company doesnt see sharp demand turnaround for another two quarters. Since Oct19, palm oil prices have started inflating and the company will view its implication on a blended basis. The company took the balance 3% price cut in Oct19, as guided in its 2QFY20 management commentary. HUVR has seen no major downtrading during the quarter. Premiumization as a trend is continuing. The company is seeing slight sequential improvement in channel liquidity and is offering some credit wherever required. It will continue its focus on developing the market and the premium segment. These include (a) rapidly improving adaptability to market requirements, (b) recognition and strong execution of the Naturals segment, (c) a continuous strong trend toward premiumization, and (d) extensive plans to employ technology, creating further entry barriers.

We maintain HOLD rating on the stock with a revised target price of Rs.2,210 based on FY21 PE of 55x. Revenue growth in-line with expectations The company reported topline growth of 6.7% for Q2FY20, aided by strong growth in Home Care segment (Rs. 3,371cr./+9.5% YoY), followed by Food & Refreshment (Rs. 1,847cr./+8.4% YoY) and Beauty and Personal Care (Rs. 4,543cr./+5.3% YoY). Despite unfavorable macroeconomic conditions and slow urban and rural demand, companys innovation driven strategy facilitated strong performance and maintained its position...

Despite challenging scenario, HUVR delivered a strong Q2FY20 with a beat on all counts versus our estimates. UVG was healthy at 5% (ahead of our 4% estimates) and growth as broad based across segments.