Accumulate Hindustan Unilever; target of Rs 1555: Prabhudas Lilladher
Prabhudas Lilladher recommended accumulate rating on Hindustan Unilever with a target price of Rs 1555 in its research report dated May 14, 2018.
May 22, 2018 / 06:24 PM IST
Prabhudas Lilladher's research report on Hindustan Unilever
HUVR has reported a robust 11% volume growth and 240bps margin expansion as benefits of cost efficiency programs and improved product mix have boosted profitability. Medium term outlook looks encouraging given 1) gradual pick up in rural demand 2) sustained benefits from GST 3) normalisation of trade channels 4) low base for 1Q and 2Q19 and 5) success of new launches in naturals segment. Although HUL expects increase in competitive activity and higher input costs, sustained benefits of Premiumisation in Home Care, success in naturals with Lever Ayush, Citra, Indulekha etc. and strong growth in emerging categories (premium laundry, hand wash, Liquid dish wash, Hair conditioner, Face-wash and Green tea) will enable steady margin expansion. We slightly tweak our numbers and increase EPS estimates by 2% for FY19 and 1% for FY20.
We remain positive on the long term structural story; however, expect back ended returns post 53% returns in past 1 year. We retain Accumulate with a target price of Rs1555 at 43xSept20 EPS (Rs1387, 42xMarch 20EPS earlier).
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