Buy Hindustan Unilever; target of Rs 1165: Motilal Oswal
Motilal Oswal is bullish on Hindustan Unilever has recommended buy rating on the stock with a target price of Rs 1165 in its research report dated May 17, 2017.
Motilal Oswal's research report on Hindustan Unilever
Domestic consumer business rose 8% YoY, with underlying volumes growing 4% YoY (adjusted for pipeline correction, 2.5%-3% growth v/s est. of -0.5%). EBITDA increased by 12.2% YoY to INR 16.5b (est. of INR 14.6b) and adj. PAT by 6.2% YoY to INR 11.2b (1.4% above estimate).
With forecast of normal monsoon, HUL has all the levers for earnings revival in place, especially when allied with benefits of low base of preceding years, return of price part of sales growth, lower promotion spends, continuing premiumization and government schemes (DBT implementation, a 24% increase in rural outlay in the budget, farm loan waiver in Uttar Pradesh, etc.). Return ratios and dividend yield are best-of-breed. We target 45x FY19E EPS (5% premium to 3-year avg.), resulting in TP of INR 1,165.
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