MOSL: HINDUSTAN UNILEVER (Buy)-Topline better than expected; commentary suggests improving momentum
HINDUSTAN UNILEVER: Topline better than expected; commentary suggests improving momentum
(HUVR IN, Mkt Cap USD75.1b, CMP INR2379, TP INR2840, 19% Upside, Buy)
- HUVR’s 1QFY22 result was better than our expectations led by topline growth.
- Sales in the month of Jun’21 were reportedly back to levels seen before the second COVID wave witnessed in Mar’21, and augurs well for Discretionary sales and margin going forward.
- Despite the higher incidence of COVID-19 cases in rural India compared to last year, the demand momentum remains resilient. The expectation of a good monsoon should sustain this momentum. Urban demand is expected to see a strong rebound. With Discretionary demand back on the recovery path, mix improvements will play a major role in driving a gradual margin improvement sequentially.
- While elevated material cost remains a near-term worry, a) a potential revival in EPS growth momentum after a relative lull in recent quarters, b) continued synergies from GSKCH (tracking ahead of expectations so far), c) HUVR pulling further ahead of peers in terms of technology and analytics as indicated in our and strong track record in recent years lead us to maintain our BUY rating on the stock.
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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