ICICI Direct recommended Hold rating on Hindustan Unilever with a target price of Rs 2075 in its research report dated October 15, 2019.
ICICI Direct's research report on Hindustan Unilever
After two quarters of moderation in volume growth, HUL’s volume growth remained on the slower path at 5%. Net sales increased 6.7% to Rs 9,852 crore while operating margins expanded 293 bps to 24.8% on account of tight control over operating costs in addition to Ind-AS 116 accounting effect. On a comparable basis, margins expanded 200 bps. Led by healthy sales growth, strong margins and lower corporate tax rates, net profit for the quarter grew 21.2% YoY to Rs 1,848 crore. The company has announced an interim dividend of Rs 11/share.
However, valuations at 50x FY21E provide little headroom for strong upside. Hence, we maintain our HOLD recommendation with a target price of Rs 2075.
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