MOSL: HINDUSTAN UNILEVER (Neutral)-Overall performance improving MoM since November-Impact of demonetization waning
​Hindustan Unilever: Overall performance improving MoM since November; Impact of demonetization waning; longer-term growth prospects intact
(HUVR IN, Mkt Cap USD30.6b, CMP INR903, TP INR920, 2% Upside, Neutral)
- We interacted with the management of Hindustan Unilever (HUVR). Our key takeaways:
- The business seems to be recovering gradually on a month-on-month basis after demonetization.
- Material costs, particularly crude and vegetable oils, peaked in January. HUVR had taken a large part of the price increases needed in the December quarter.
- Ad spends were (surprisingly, in our view) back to pre-demonetization levels. Promotions have been withdrawn in categories where commodity cost inflation is high, but persist in some other categories.
- The management remains confident of strong longer-term growth, supported by its WIMI (Winning In Many Indias) strategy.
- We maintain our Neutral rating; our target price is revised to INR920 (37x forward EPS; 10% discount to 3-year average), as we roll forward to March 2019E EPS.
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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