Buy Hindustan Unilever; target of Rs 3010 : Motilal Oswal

Motilal Oswal's research report on Hindustan Unilever

HUVR’s performance was in-line with our expectations. It gained market share in more than 75% of its portfolio. Volumes grew 4% YoY during the quarter v/s our expectation of 5%. The pricing growth is expected to taper off gradually, but the management has cautioned that the volume growth may pick up with a lag. A&P spends as a percentage of sales during the year were the lowest in the past 18 years. Management commentary highlighted that A&P investments are set to normalize going forward, hence, we expect EBITDA margin to improve to earlier levels, but with a lag.

Outlook

We maintain a positive outlook on the stock based on HUVR’s continued market share gains in a challenging consumption environment. HUL’s focus on driving premiumization across categories is standing it in good stead. We reiterate our BUY rating on the stock with a TP of INR3010.

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