MOSL: HINDUSTAN UNILEVER (Buy)-Demand outlook similar to 2QFY20
(HUVR IN, Mkt Cap USD61.3b, CMP INR2006, TP INR2378, 19% Upside, Buy)
We spoke to the management of Hindustan Unilever (HUVR) for an update on the overall market condition. Key takeaways highlighted below:
Demand environment showing no signs of improvement
** The demand scenario is similar to last quarter with no major improvement or deterioration.
** Rural demand has seen slight sequential slowdown.
** The company doesn’t see sharp demand turnaround for another two quarters.
Rising raw material cost in a weak environment
** Since Oct’19, palm oil prices have started inflating and the company will view its implication on a blended basis. However, the company believes that it’s too early currently to decide on a price increase.
** The company took the balance 3% price cut in Oct’19, as guided in its 2QFY20 management commentary.
Premiumization trend continuing
** HUVR has seen no major downtrading during the quarter.
** Premiumization as a trend is continuing.
** Further, premium as a proportion of overall sales is holding up decently.
Other pointers
** The company is seeing slight sequential improvement in channel liquidity and is offering some credit wherever required.
** HUVR is seeing nothing extraordinary in ad-spends or competitive intensity.
** It will continue its focus on developing the market and the premium segment.
** Modern Trade is growing well ahead of General Trade.
Hindustan Unilever is predominantly engaged in manufacturing and distributing consumer products mainly in India. Co. operates five main business segments: Soaps and Detergents include soaps, detergent bars, detergent powders, detergent liquids, scourers, etc.; Personal Products include products in the categories of Oral Care, Skin Care (excluding soaps), Hair Care, Deodorants,Talcum Powder, Colour Cosmetics, Ayush services; Beverages include tea and coffee; Package Foods include Branded Staples (Atta, Salt, Bread, etc.), Culinary Products (tomato based products, fruit based products, soups, etc.) and Frozen desserts; Others include Exports, Chemicals, Water business, Infant Care Products.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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