Buy Hindustan Unilever Ltd; target of Rs 3185: Sharekhan

Sharekhan is bullish on Hindustan Unilever Ltd has recommended buy rating on the stock with a target price of Rs 3185 in its research report dated October 20, 2021.

Broker Research

October 20, 2021 / 13:08 IST

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Hindustan Unilever Limited’s (HUL) Q2FY2022 operating performance was in-line with expectation with domestic revenue, growing by 11% to Rs. 12,724 crore, while PAT growth was moderate at 6% to Rs. 2,187 crore due to a 46 bps decline in OPM at 24.6%. Domestic volume growth stood at 4%, lower than expectation of 5-7%. Home care and beauty and personal care registered double-digit growth of 15% and 10%, respectively. Foods business growth stood at 7% on base of high teens growth. Rural demand has seen some moderation in the past few months, while urban demand has picked up due to improving mobility. OPM to remain at 24-25% in the near term.

Outlook

HUL’s Q2 performance was in-line with our as well as street’s expectation. With a strong brand portfolio, strong team with a great focus supported by R&D, and agile distribution and supply chain, HUL’s management is focusing on enhancing the shareholder’s value in the next decade. The stock has corrected by ~11% from its recent high and is currently trading at 53x and 45x its FY2023 and FY2024 earnings, respectively, factoring in near-term headwinds. We maintain our Buy recommendation on the stock with an unchanged PT of Rs. 3,185.

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