Dolat Capital's research report on Hindustan Unilever
Revenues came in line with our estimate but EBITDA and APAT was a beat. Core business registered 8% volume de-growth - was in line. Core business witnessed 170bps deterioration in margins but merger with GSK Consumer was margin accretive, helped restrict margin contraction to 110bps. Small SKU’s contribution has increased in rural areas while consumption of large packs has remained firm in urban geographies. 80% of the company’s portfolio (including GSK), related to health, hygiene and nutrition grew by 6% during the quarter. Ex-GSK, Home care/Personal care/Food & refreshment reported 2%/12%/4% sales decline. We have maintained our FY21E and FY22E EPS to Rs 34.3 and Rs 40.0. Though the operational performance was better than estimate, persistent supply constraints would have impact in ensuing quarters.
Outlook
Maintain TP at Rs 2,320 (58x FY22E). We Maintain Reduce. Considering recent run in stock price, there is limited room for further up-move. However, fundamentally, we see high growth prospects for HUL going ahead. Buy on dips.
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