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Target: ₹2,798
CMP:₹2,505
We attended Hindustan Unilever’s analyst meet where the management reiterated its strategy to grow the consumer franchise through 1) competitive growth in core offerings 2) premiumisation initiatives 3) market development activities 4) winning in future channels like MT/E-com.
HUL continues to leverage its WIMI strategy to drive penetration by providing differentiated products across regions. We believe market development initiatives in emerging categories and higher share in MT/E-com can result in growth acceleration in coming years.
HUL will continue to compete at the bottom of pyramid as large mass of customers will take time to graduate to more premium products. We believe this will continue to provide competitive growth to the company. Adoption of technology across the organization continues to help the company predict demand patterns, take pricing decisions, reduce time for innovation amongst other benefits.
HUVR’s long term story remains intact (24-25 per cent margin guidance) with input costs having peaked out. We estimate 16.6 per cent PAT CAGR over FY22-25 and arrive at DCF based target price of ₹2,798 (unchanged).
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