Hindustan Unilever to see challenging FY14: Credit Suisse

Moneycontrol Bureau

Brokerage house Credit Suisse expects FY14 to be a challenging year for Hindustan Unilever, as it could face headwinds in the form of slowing revenue growth, decrease in other income and increases in royalty and tax rates.

"Revenue growth will likely moderate to low teens as price growth comes off sharply in soaps and detergents after two years of above-normal increases. The slowdown in relatively discretionary premium hair and skin care adds to the growth challenge," says the Credit Suisse note to clients.

"Royalty and tax rate increases, a lack of operating leverage given the low revenue growth, and muted other income growth given the Rs 20 billion special dividend pay-out last quarter are key headwinds. These factors will largely mitigate the increase in gross margins that will flow through due to the reduction in palm oil," the report adds.

Credit Suisse has retained its 'neutral' rating on the stock with a price target of Rs 485.

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