EUR 120.00 For Business Accounts Only

MOSL: Morning India (2/April/20): 1. Hindustan Unilever (Acquires Horlicks brand rights for India market); 2. Auto (April-20 wholesales); 3. Jubilant Life; 4. EcoScope

MOrning India (2/April/20):

Today’s top research idea
Hindustan Unilever: Acquires Horlicks brand rights for India market

** HUVR has acquired the Horlicks brand rights for the India market from Horlicks for INR30.45b. Brand rights in the rest of the 19 countries are being acquired by Unilever Plc.

** HUVR now need not pay royalty to GSK or parent Unilever for the use of the Horlicks brand in India. HUVR pays ~2.8% royalty on its business. If HUVR were to pay royalty at the same rate for GSKCH, it would have been INR1.6b in FY21. The transaction enables effective utilization of HUVR's cash balance (~INR85b at end-FY20E). We note that HUVR generates annual OCF of INR80-100b. The deal will not affect HUVR's dividend payout, in our view.

** Merger will be effective from 1st Apr'20 (record date for allotment of shares: 17th Apr'20). HUVR's shares will be allotted to all GSKCH shareholders from end of April to early May.

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