MOSL: HINDUSTAN UNILEVER (Buy) | Annual Report Update-More of the same-Adaptation to and recognition of key trends keeping it ahead in the game
Hindustan Unilever | Annual Report Update: More of the same; Adaptation to and recognition of key trends keeping it ahead in the game
(HUVR IN, Mkt Cap USD57.6b, CMP INR1845, TP INR2070, 12% Upside, Buy)
Enthused with the interesting business perspectives provided by Hindustan Unilever (HUVR) in its last week, we now take a close look at its FY19 annual report to get a comprehensive record of its efforts to stay ahead of peers in terms of technology, nimbleness and sustainability.
‘Detergents’ maintains the shine
With a contribution of 44%/47%/38% of incremental sales in FY17/18/19, Detergents continues playing a key role in driving HUVR’s overall growth (based on Form No. MGT-9 in the annual report). However, we highlight that it is crucial to keep a close eye on competitive actions (especially from P&G) in this segment (more details in our published in Feb’19). Separately, Soaps performance has been tepid over the past four years, although some bounce back was seen in FY19. Its third largest segment Cosmetics & Toiletries (C&T) has again started contributing significantly to overall sales in FY19 after a muted show in the preceding two years.
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.
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