FREE

MOSL: Morning India (17/July/18): 1. Hindustan Unilever; 2. Bajaj Auto; 3. Ashok Leyland; 4. Emami (AR); 5. DCB Bank; 6. Metals Weekly

MOrning India (17/July/18): 1. Hindustan Unilever; 2. Bajaj Auto; 3. Ashok Leyland; 4. Emami (AR); 5. DCB Bank; 6. Metals Weekly

 

Today’s top research idea

Hindustan Unilever: Broad-based growth encouraging, margins impressive despite high adspend

• Continued broad-based volume growth and strong EBITDA growth despite high adspend were the key highlights of 1QFY19 results.
• Four key trends are particularly relevant for HUVR, which have resulted in an elevation in its earnings growth trajectory compared to peers and also its own history - (i) rapid adaptability to market requirements, as exemplified by its WIMI strategy, (ii) strong execution and recognition of naturals as a key sub-segment across categories, (iii) strong trend toward premiumization and (iv) extensive plans to employ technology, creating further entry barriers. HUL not only offers highest earnings visibility in the large-cap Indian consumer space, but also has by far the highest return ratios.
• On a target multiple of 54x Jun'20E EPS (25% premium to three-year average due to significantly improving business fundamentals), we get a TP of INR2,010 (prior: INR1,925). Maintain Buy.

Piping hot news

High interest rates, oil prices to eat into India’s growth: IMF

• The International Monetary Fund (IMF) on Monday said the Indian economy will grow slower than what it had estimated just three months ago because of higher crude oil prices and speedier interest rate hikes. In an update to its World Economic Outlook (WEO), IMF trimmed India’s growth projection for 2018-19 by 10 basis points to 7.3%, citing negative effects of higher crude oil prices on domestic demand and faster-than-anticipated monetary policy tightening due to higher-than expected inflation. For 2019-20, IMF cut its projection by a sharper 30 basis points to 7.5%.