Hindustan Unilever - Waking up after a long sleep!

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Hindustan Unilever - Waking up after a long sleep!

Microsec is bullish on Hindustan Unilever (HUL) and has recommended buy rating on the stock with a target of Rs 500 in its December 26, 2011 research report.

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Microsec is bullish on Hindustan Unilever (HUL) and has recommended buy rating on the stock with a target of Rs 500 in its December 26, 2011 research report.

"Hindustan Unilever (HUL) is well placed to maximize on the opportunity in a growing market like india with the help of its sustained brand power. The company has increased sharp focus on the needs of its consumers and has build a solid distribution network to support it. Premiumisation in urban and rural penetration are two biggest opportunities in india that will propel HUL's future sales growth. While 60% of the market is still at the bottom-of-the-pyramid, premiumisation is the most prominent trend across categories of foods and personal care. Expansion of Outlets with improved visibility and availablity of its products. HUL increased its direct retail coverage by adding 600000 outlets and improved the visibility of its products through opening up of 'Perfect Stores'. Increasing Innovation in the product line is the 'mantra' for growth in HUL . Almost 35% of its turnover in FY11 has come though innovation. HUL focuses on consumer insight and use of breakthrough technology to deliver better and bigger innovations to the consumers. For Eg. Dove shampoo in superior packaging, Brooke Bond Sehatmand delivering vitamins in tea , Project Shakti & Shaktiman etc."

"At the CMP of INR419, the stock is currently trading at a P/E of 39.7x. It discounts its FY12E EPS of Rs.11.64 by 36x and its FY13E EPS of Rs 13.9 by 30x. We value the stock at a target P/E multiple of 36x based on its FY13E EPS to arrive at the Target price of INR 500. We Rate Hindustan Unilever (HUL) a 'BUY'. It has strong rural penetration, sustained brand power, strong distribution newtork, continuous product innovation and domestic consumption story. Hindustan Unilever is India's largest fast moving consumer goods company, with leadership in Home & Personal Care Products and Foods & Beverages. HUL's brands, spread across 20 distinct consumer categories, touch the lives of two out of three Indians," says Microsec research report.

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To read the full report click on the attachment