MOSL: Morning India (13/June/19): 1. Hindustan Unilever – Annual Report Update (More of the same); 2. Avenue Supermarts (Growth prospects strong, but margin headwinds blowing fiercely); 3.Tata Motors; 4. Zensar
MOrning India (13/June/19): 1. Hindustan Unilever – Annual Report Update (More of the same); 2. Avenue Supermarts (Growth prospects strong, but margin headwinds blowing fiercely); 3.Tata Motors; 4. Zensar Technologies; 5. EcoScope
Today’s top research idea
Hindustan Unilever: More of the same; Adaptation to and recognition of key trends keeping it ahead in the game
- Key highlights from HUVR annual report
- 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.
- Soaps performance has been tepid over the past four years, although some bounce back was seen in FY19. Cosmetics & Toiletries has started contributing to sales again in FY19 after a muted show in the preceding two years.
- The annual report also enumerates the success that it has witnessed and the ambitious plans that the company has for recent acquisitions- Indulekha, Adityaa Ice-cream and GSKCH. We believe acquisitions will be an important component of HUVR's growth going forward.
- On a target multiple of 50x Jun'21E EPS, we maintain target price of INR2,070. Maintain Buy.
Piping hot news
Retail inflation at seven-month high in May; industrial growth at 3.4% in April
- Retail inflation surged to a seven-month high in May. It is the fourth consecutive monthly rise. But there is some good news as the financial year 2019-20 began on a positive note with the industrial sector registering 3.4 per cent growth in April. The data is critical as the General Budget is scheduled to be presented on July 5. Though the latest monthly data is encouraging, the overall industrial scenario is not so upbeat, as various sectors, and in particular the automobile and FMCG sectors, are facing slowdown in sales — a reason for India Inc to seek some relief and incentives in the Budget.
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