Accumulate HUL; target of Rs 421: Dolat Capital

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Accumulate HUL; target of Rs 421: Dolat Capital

Dolat Capital is bullish on Hindustan Unilever (HUL) and has recommended accumulate rating on the stock with a target of Rs 421 in its February 08, 2012 research report.

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Dolat Capital is bullish on Hindustan Unilever (HUL) and has recommended accumulate rating on the stock with a target of Rs 421 in its February 08, 2012 research report.

"HUL's Q3FY11 results inline with our estimates with Net Sales at Rs 59.3b up 15.8% v/s our estimate of Rs 60.2b. EBITDA at Rs 9.7bn up 33.9% as EBITDA margins expanded by 220bps to 16.3% (our estimate of 15.5%). PAT at Rs 7.6bn up 33.7% v/s our estimate of Rs 7.3bn. Domestic FMCG business grew by 16.5% YoY driven by strong growth in Soaps and Detergents. The underline volume growth during the quarter stood at 9.8% (13% in Q3FY11)."

"Management indicated that it has not witnessed any slowdown in the FMCG both in urban and rural India. Soaps and detergent volumes grew in mid single digit. The company has realigned its Ad-spend with the Industry spend in the category. Lower adspend coupled with change in mix has resulted in an improvement in operating performance. Personal Products volumes grew in mid teens indicating a marginal decline in realisation. Lower realization was on account of promotional offers and increased share of LUPs. Oral Care segment witnessed muted growth while Skin and Hair care grew ahead of the market."

"Sustained volume growth and ability of HUVR to grow ahead of the market is encouraging. Further, HUVR has been able to improve its operating performance with a focus on ensuring strong volume growth across categories. The company will also benefit from the increase in its rural reach and "Perfect Store" strategy would improve its visibility. We have introduced FY14 and estimate an EPS of Rs 16.3. At a CMP of Rs 385, the stock trades at 27x FY13E and 24x FY14E. We have a target price of Rs 421 and recommend Accumulate," says Dolat Capital research report. 

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To read the full report click on the attachment