Dolat Capital Market's research report on Hindustan Unilever
Revenues came ahead of our estimate but APAT was in line. Core business registered 7% sales growth - was a marginal beat. Beauty and personal care business reported 9.7% growth after 4 consecutive quarters of decline, was a positive surprise. Most discretionary categories witnessed revamp during the quarter. However, increase in RM and brand investment in key categories resulted in EBITDA margin contraction. We believe that the brand investment would help HUL in the long run. We have tweaked our FY21/FY22/FY23E EPS estimates to Rs 34.0/40.0/46.1 to factor in Q3 performance. Valuing the stock at 55x FY23E EPS, we have arrived at a TP of Rs 2,535.
We Maintain Reduce. Considering recent run up in stock price, there is limited room for further upside. However, fundamentally, we see high growth prospects for HUL going ahead. Buy on dips.