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MOSL: Morning India (10/June/19): 1. Hindustan Unilever (Purpose-led, future-fit, high multiples to remain); 2. Financials (RBI issues revised stressed asset resolution framework; 3. Kotak Mah. Bank; 4. Voices

MOrning India (10/June/19): 1. Hindustan Unilever (Purpose-led, future-fit, high multiples to remain); 2. Financials (RBI issues revised stressed asset resolution framework; 3. Kotak Mah. Bank; 4. Voices (Financials drive performance off low base)

 

Today’s top research idea

Hindustan Unilever: Purpose-led, future-fit, high multiples to remain

• 'Companies with purpose last; brands with purpose grow and people with purpose thrive' - Management summed up the key to its continued success.
• The decentralization of strategy to a customized level by regional teams is freeing up top management time to 'focus on longer-term goals, manage disruption, explore inorganic growth opportunities, and 'land bigger and faster innovation' (speed-to-market up 40% in recent years).
• Management places primacy on data and analytics; it said, 'Along with the traditional strengths of brands and people, data is now its third key strength'.
• Emphasis by management on recent inorganic acquisitions makes us believe that management's appetite for acquisitions as a growth medium is whetted.
• On a target multiple of 50x Jun'21 EPS, we derive a TP of INR2,070. Maintain Buy.

Piping hot news

No corporate tax relief for large companies in the Union budget

• Finance minister Nirmala Sitharaman won’t cut the tax rate for large companies to 25% from 30% in the forthcoming budget and may raise the long-term capital gains tax, as the government grapples with a potential revenue shortfall and additional spending commitments. The Narendra Modi administration is exploring ways to garner more tax revenue either by tapping new sources or by digging into existing ones, a person familiar with the discussions in the government said on condition of anonymity.