Hindustan Unilever Ltd. share price target

HUVR delivered a modest operational beat in Q1FY20 (5% UVG, 13% EBITDA growth) with a strong EBITDA Margin expansion of 244bps. This more than modest Op. Margin beat was led by tight cost control, leverage in A&SP; due to lower competitive intensity and RM tailwinds.

In 2017, our upgrade on HUL was led by the rationale that the company will outperform its peers during a challenging environment. We are entering another patch of uncertainty (opportunity to outperform) but this time risk reward is not favorable. We maintain our NEUTRAL rating, which may change with (a) Further time correction in the stock, (b) Recovery in rural demand and (c) Successful integration of GSK portfolio (ability to surprise on margin expansion). HULs 1QFY20 performance reflects the underlying stress in consumption. With a turn in macros, HUL will be the first to bounce back given the inherent strength in its business. We maintain our NEUTRAL rating since we downgraded in Jul-18 (stock is flat since then). We value HUL at 45x on Jun-21 EPS with TP of Rs 1,804.

Despite higher penetration levels, the detergent segment continued to witness strong growth mainly on account of premiumisation trend. The upgradation trend from Wheel' to Rin' in central India and powder to liquids in urban India has been driving growth in the home care segment. The company re-launched Rin' nationally during the quarter and launched Sunlight Liquid' in certain geographies. The company continued to witness strong in growth in south India markets. In purifiers, HUL has changed its strategy to concentrate on the premium segment by launching purifier with copper charge technology in FY19....

We upgrade HUVR from HOLD to Accumulate given that HUVR should emerge Change in Estimates | Target | Reco as one of the biggest gainers from Govt's social push aimed at bottom end of...

Satisfactory volume growth on high base and consumption slowdown HUL's volume grew +5% YoY and operational results were in line with our estimate. We are positive about this as (1) the base was unfavorable (+12%) and (2) the industry, across categories, is experiencing a slowdown. We expect the volume growth to remain in mid-single digit, due to an unfavorable base in next few quarters. Even a 6%+ volume growth is a positive, given HUL's size. In addition, the GM and EBITDA margin rise on an unfavourable base (highest Q1 EBITDAM in 10 years+), indicates that...

Hindustan Unilever Limited's (HUL) Q1FY2020 performance was largely in-line with our expectation. Revenue grew by ~7% and adjusted PAT grew by ~11%. Operating profit margin (OPM) expanded by 150 BPS on a comparable basis to 26.2%. Volume growth of the domestic consumer business moderated to 5% in Q1FY2019 from 7% in Q4FY2019 mainly on account of consumption slowdown in rural India. However, the same was decent in view of industry volume growth of ~6% during the quarter. We expect the volume growth...

EBITDA of INR26.5b was up 17.6% YoY (13% on comparable basis after adjusting for Ind- AS 116; v/s est. of 8.7% to INR24.5b), while PAT (bei) was up 11.7% YoY to INR17.5b (v/s est. Domestic consumer business sales were up 7% YoY led by underlying volume growth of 5% YoY (v/s est. Company took a 4-6% price reduction in in July given that commodity costs are softening further; this is expected to boost demand, Barring home care and certain pockets in modern trade, competitive intensity has declined in most categories, which is one of the factors resulting in lower industry-wide ad spends, and launch momentum remains strong.

HUL has been able to reshape the overall market towards premium side with mid-price range portfolio whose contribution has increased 400 bps to 25% in 2018 over last seven years. Similarly, premium brands contribution has increased 500 bps to 22% in 2018 over the period Over the last seven years, growth in laundry has been driven by premium segment (contribution increased from 17% to 22%) whereas mid-priced segment (Rin) contribution has dropped from 25% to 21%. Mass segment (Wheel) has witnessed a slight reduction of 100 bps drop...

HUL's Annual Investor Meet reinforced our positive stance on long term growth potential and business strategy of the company. HUL continues to ride on twin engines of new category creation and innovation in existing segments to remain ahead of the competition. We believe sustained investment in categories like Liquid Detergents, face wash, Hand wash,...

The decentralization of strategy to a customized level by regional teams (with guardrails provided by top management) is aiding flexibility (exemplified by the WIMI strategy), and also freeing up top management time to 'focus on longer-term goals, manage disruption,explore inorganic growth opportunities, and land bigger and faster innovation (speed-to-market up 40% in recent years).