Hold Hindustan Unilever; target of Rs 1180: ICICI Direct
ICICI Direct recommended hold rating on Hindustan Unilever with a target price of Rs 1180 in its research report dated July 19, 2017.
July 19, 2017 / 05:51 PM IST
Hindustan Unilever share price performance in FY18: Up 47 percent | FY19: Up 28 percent | FY20: Up 35 percent.
ICICI Direct's research report on Hindustan Unilever
HUL reported a healthy set of numbers ahead of our estimates despite the de - stocking ahead of GST implementation. The company reported sales growth of 5.0% YoY (volume remained flat) to Rs 9094 crore, 8.1% higher than our estimate of Rs 8416.3 crore • The refreshment segment grew 10.8% YoY, followed by home care segment, which grew by 5.9%. The food and personal care segments grew 4.3% and 3.5% YoY, respectively • The operating margin expanded 165 bps YoY to 20.2% against our estimate of 1 9.1%. This was largely driven by saving across cost items. Raw material, employee and marketing costs were down 75 bps, 32 bps and 20 bps YoY as per cent age of net sales • On a segmental basis, home care segment’s EBIT margin expanded 232 bps YoY to 14.7% whereas, for personal care witnessed marginal improvement of 52 bps to 24.7%. Foods segment and refreshments also reported an expansion in EBIT margin by 819 bps and 314 bps YoY, respectively • Led by healthy revenue & margin expansion, profit for the quarter grew 9.3% YoY to Rs 1283 crore against estimate d Rs 1094.1 crore.
We remain confident about the company’s commitment towards growth led by innovation, volume growth, premiumisation and, thus, market share gains. We estimate revenue, PAT CAGR of 9.6 %, 16.2%, respectively, in FY17 - 19E with 2 62 bps margin expansion over the same period to 20.2 % in FY19E. However, on account of price movement, we maintain our HOLD recommendation on the stock with a revised target price of | 1180 /share.
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