Prabhudas Lilladher's research report on Hindustan Unilever
We expect HUVR to witness MoM improvement in demand since June-21 aided by resilient Rural demand and improving Urban demand. Inflation in Palmoil and Crude is likely to pressurize margins, however the intensity will be likely lower than 1Q22. Calibrated price hikes will not be sufficient to ward off the inflation in input costs and higher intensity in ad-spends. We estimate 8% volume and 4% growth in realisations during 2QFY22. EBIDTA and PAT is estimated to grow at 9.4% (Rs.31.4bn) and 9.3% (Rs22.3bn).
We believe worst is over in margin pressures led by higher prices and peaked out input costs. We estimate 15% PAT CAGR over FY21-24 and arrive at DCF based target price of Rs2915. Although recent upsurge in stock price limits near term gains, we recommend accumulating HUL for Long term.