Reduce Hindustan Unilever; Target Of Rs 2060: HDFC Securities
HDFC Securities recommended reduce rating on Hindustan Unilever with a target price of Rs 2060 in its research report dated October 21, 2020.
Oct 21, 2020 / 06:21 PM IST
HDFC Securities research report on Hindustan Unilever
HUL posted a mixed result, with a marginal beat in revenue (3% vs 1% HSIE), but a slight miss in margins. UVG was at +1% (HSIE -2%). Home Care remained weak at 2% YoY decline as demand for fabric wash was sluggish (also impacted by price cuts). BPC recovered well but was flat after a sharp 12% YoY decline in 1QFY21. F&R clocked strong growth of 19% (ex-GSK), aided by in-home consumption. The company clocked double-digit growth in 80% of its portfolio, which indicates a strong recovery. GM contracted by 145bps YoY due to commodity inflation and adverse product mix. ASP saw a sequential increase as the company resumed investments. We expect a gradual recovery in core categories in 2HFY21. We maintain our below-consensus EPS estimate for FY21/FY22/FY23.
We roll forward our target price to Sep-22E EPS and value HUL at 50x P/E to derive a TP of Rs 2,060. Maintain REDUCE on a muted absolute growth trajectory and limited scope for re-rating.
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