MOSL: Morning India (24/July/19): 1. Hindustan Unilever (Double-digit earnings growth in tough quarter reinforces positive view); 2. Larsen & Toubro; 3. HDFC Life Insurance; 4. UPL; 5. Marico; 6. United Spirits
MOrning India (24/July/19): 1. Hindustan Unilever (Double-digit earnings growth in tough quarter reinforces positive view); 2. Larsen & Toubro; 3. HDFC Life Insurance; 4. UPL; 5. Marico; 6. United Spirits; 7. Zee Entertainment; 8. Torrent Pharma
Today’s top research Idea
Hindustan Unilever: Double-digit earnings growth in tough quarter reinforces positive view
- HUVR's 1QFY20 net sales grew 6.6% YoY to INR101b. EBITDA of INR26.5b was up 17.6% YoY (13% on comparable basis after adjusting for IndAS 116), while PAT (bei) was up 11.7% YoY to INR17.5b. Domestic consumer business sales were up 7% YoY led by underlying volume growth of 5% YoY.
- Overall gross margins were flat for the quarter at 54% while EBITDA margin saw an expansion of 240bp YoY to 26.2% with comparable margin expansion of 150bp.
- HUVR's in-line results mean that there is no material change to EPS forecasts. We believe the premium valuations are justified as the company has the best earnings growth visibility in the large-cap Indian consumer space, and also, the highest return ratios so far. On a target multiple of 48x Jun'21 EPS, we derive a TP of INR1,970, with 16% upside.
Piping hot news
IMF cuts India’s growth forecast for 2019-20 to 7%
The International Monetary Fund (IMF) has cut India’s growth forecast for 2019-20 to 7% from its forecast in April of 7.3% on poor demand conditions, it said on Tuesday. The IMF’s World Economic Outlook July update also cut India’s growth forecast in 2020-21 to 7.2% from the previous estimate of 7.5%.“India’s economy is set to grow at 7% in 2019, picking up to 7.2% in 2020,” the report said. “The downward revision of 0.3 percentage points for both years reflects a weaker-than-expected outlook for domestic demand.”
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