Buy Hindustan Unilever; target of Rs 2960: Edelweiss Securities

Edelweiss Securities' report on Hindustan Unilever

Hindustan Unilever (HUL), which now houses one of the biggest food businesses in India, has completed SAP migration and 85% of go-to-market integration for its nutrition business. With this strong grounding, the company is taking the next important steps, i.e.: i) getting aggressive in terms of launches – Horlicks Diabetes Plus already launched; and ii) investing in market development – launched INR2 and INR5 sachets to drive trials. Margin realisation is ahead of the plan, and we see another 300–400bp opportunity to reduce costs, which could be redeployed towards market development.

Outlook

HUL has expanded direct coverage in the nutrition business by 2x compared to pre-acquisition. Retain ‘BUY’ with a TP of INR2,960.

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