Sharekhan's research repor on Hindustan Unilever
Core business volume growth stood at 1%, slightly lower than our expectation of 1-2%. About 80% of portfolio (largely essentials) registered 10% volume-led growth. Higher tea and palm oil prices dragged down gross margins by 145 bps; lower ad spends resulted in a 28 bps improvement in OPM to 25.1% (matching our expectation of 25.4%). The foods business (excluding GSK Consumers’ merger) grew by 19%, beauty and personal care (BPC) posted flat sales, recovered from a 12% decline in revenue in Q1FY2021.
We broadly maintain our earnings estimates for FY2021/22/23; sustained strong rural demand and synergistic benefits from GSK Consumers’ merger would drive up earnings in the near term; retain Buy with an unchanged PT of Rs. 2,550.
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