Buy Hindustan Unilever Limited target of Rs 2305: Sharekhan

Sharekhan's research report on Hindustan Unilever Limited

The GSK Group sold 5.7% stake (13.37 crore shares) in Hindustan Unilever (HUL) through multiple block deals in the open market. This has reduced the supply overhang in the stock. The merger of GSK Consumer Healthcare's business with HUL will make the latter one of the largest players in the domestic foods space and would lead to earnings accretion of 4-8% over FY2021/FY2022. HUL’s stock price has corrected by ~16% from its recent high factors in the sluggish performance in Q4FY2020. With 50-55% of business catering to essential categories and the company’s strong direct distribution reach, we expect HUL to recover rapidly post the pandemic situation.

Outlook

HUL has a strong balance sheet with robust cash flows and goods dividend payout which makes it a safest bet in the uncertain environment. We maintain our Buy recommendation on the stock with unchanged PT of Rs. 2,305.