Buy Hindustan Unilever; target of Rs 2900: Motilal Oswal

Motilal Oswal is bullish on Hindustan Unilever recommended buy rating on the stock with a target price of Rs 2900 in its research report dated June 26, 2024.

Broker Research

June 28, 2024 / 11:15 IST

Buy

Motilal Oswal's research report on Hindustan Unilever

Hindustan Unilever’s (HUVR) FY24 annual report provides insights about its key focus areas to build upon its sustainable growth model. The company remains committed to distribution expansion (reached 9mn retail touch-points with 3mn direct-reach), digital initiatives (D2C business spans 10 brand websites covering over 19k pin codes in India), ramping up the alternate channel (ecommerce + MT combined at ~30% vs. 20% in FY20) and Shikhar app (B2B; now reaches 1.3m retail outlets). Despite macro challenges that have affected its operational performance in the last two-years, HUVR continues to focus on capital efficiency. HUVR has received tax refund of INR31.5b related to FY21 and FY22. Its cash flow from operation adjusted to tax rose by 23% YoY to INR123b with a two-year CAGR of 17%, and FCF increased by 21% YoY to INR109b with two- year CAGR of 17% led by working capital efficiency.

Outlook

We continue to believe that in a steady macro environment, HUVR will boost its volume performance in FY25/FY26. We maintain our BUY rating with a TP of INR2,900 (55x P/E FY26).

For all recommendations report, click here