Hindustan Unilever Ltd. share price target

We remain confident on HUL's commitment towards volume led growth backed by new launches, premiumisation. We introduce FY20E numbers and estimate revenue, PAT CAGR of 8.3%, 17.1%, respectively, in FY1720E. However, on account of sharp price movement, we maintain HOLD...

HUVR's 3QFY18 net sales rose 11.5% YoY to INR85.9b. Domestic consumer business grew 17% YoY, with 11% underlying volume growth. EBITDA increased by 23.9% YoY to INR16.8b (est. of INR16b) and PAT (bei) by 30.2% YoY to INR12b (est. of INR10.9b). Segmental performance: Home care and Personal care revenues were up 1.9% and 2.8% YoY, respectively. Sales of Foods and Refreshments- the relatively small segments - were up 7.5% and 7.2% YoY, respectively. EBIT margin expanded by 420bp YoY for Home care and 150bp for Personal care, while it contracted by 570bp for Foods and 110bp for Refreshment.

Q2 tops estimates: Net sales, EBITDA and adj. PAT grew 7%, 20% and 19%, vs. consensus expectation of 7%, 14% and 11%. Like to like (LTL) domestic consumer revenue grew ~10% on ~4% volume growth.

Reported Profit after Tax (after accounting for exceptional items) grew by 16.4% Y-O-Y to `1276crs in Q2. PAT Margins stood at 15.4% as opposed to 14% in the same quarter in previous year. Exceptional income includes profit on sale of equity shares in KCLL. PAT...

We value HUL based on 42x P/E on Sep-19EPS to arrive at a TP of Rs 1,401. We maintain BUY. HULs net revenue grew by 6.5% to Rs 82bn. Like-to-like growth was at 10%, better than our expectation of 8%. UVG was at 4% (flat in 1QFY18 and -1% in 2QFY17), in-line with expectations. EBITDA and APAT have risen by stellar 20% and 16%, respectively.

Hindustan Unilever (HUL) beat estimates by registering a 16% year-on-year increase in its standalone net profit at Rs 1,276 crore during the July-September quarter, on the back of volume growth which at 4% was in line with expectations and domestic consumer sales growth across segments. The net sales for September 2017 quarter have increased by 6% to Rs 8309 crore. During the quarter, Comparable Domestic Consumer Growth was 10% and Underlying Volume growth was 4%. Prices reduced by 3-4% to pass on net GST benefits. OPM inclined by 233 bps to 20.2%. Profit before tax and exceptional item inclined by 13% to Rs 1765 crore. The net profit inclined...

Despite chaos of GST transition, HUL reported healthy numbers for the quarter with revenue, EBITDA in line with our estimates. Led by stable consumer offtake despite trade disruption during GST transition coupled with 3-4% price reduction in soaps and detergent categories to pass on the benefit of GST, HUL reported 4% YoY volume growth (against our estimate of 2%). Revenue grew 10% YoY after considering accounting changes under GST On a segmental basis, home care, food, refreshment and personal...

HUVR's 2QFY18 net sales rose 5.9% YoY to INR83.1b. Domestic consumer business grew 10% YoY, with 4% underlying volume growth. EBITDA increased 19.5% YoY to INR16.8b (est. of INR15.6b) and PAT (bei) by 14.2% YoY to INR12.4b (est. of INR11.9b). EBIT margin expanded by 390bp YoY for Home care, 130bp for Personal care, 110bp by Foods and 280bp for Refreshment. Segmental performance: Home care and Personal care revenues were up 13% and 8% YoY, respectively. Sales of Foods and Refreshments the relatively small segments were up 10% and 11% YoY, respectively....

Strong margin tailwinds offset the weak pace of volume recovery We believe the HUL stock could continue to do well on the back of this result, whether or not we agree with the heady valuation of 49-50x NTM EPS that it currently trades at. Sales grew 10% on comparable basis with volume growth of 4% - inline with expectations but not really great, especially considering the favourable base - volumes were down 1% in the base quarter; management cites the continued slackness in rural demand to be the reason for the slower pace of recovery. Margin sprung a big positive surprise again and helped boost earnings a great deal like-to-like expansion was to the tune of 180bps led by strong GPM...

HUL's high valuation is natural, considering consistent market share gain with margin expansion and strong RoCE. We expect HUL to be a key beneficiary of GST and premiumisation. We value HUL based on 42x P/E on Sep-19 EPS. Our TP is Rs 1,363. We maintain BUY. We interacted with the management of HUL, and covered points like (1) GST implementation update, (2) Progress in channel restocking, (3) Trends in consumer off-takes and (4) Change in cost elements.