Comments
Elara Capital
Hindustan Unilever (Accumulate)
CMP: ₹1,672.35
Target: ₹1,872
Hindustan Unilever is engaged in fast-moving consumer goods business comprising home and personal care, foods and refreshments.
Hindustan Unilever’s net sales was up 9.3 per cent y-o-y at ₹9,940 crore, 2 per cent lower than estimates. The domestic business posted volume growth of +7 per cent y-o-y (versus our estimates of 8 per cent y-o-y) and value growth of +9 per cent y-o-y. Home care at 13 per cent y-o-y and largely volume-led and food & refreshments at +10 per cent y-o-y lifted growth while personal care (+7 per cent) lagged. Gross margin contracted 27 bps y-o-y on crude inflation and rupee devaluation against dollar by 9.8 per cent y-o-y. EBITDA was up 13.3 per cent y-o-y at ₹2,320 crore, 5.5 per cent lower than our estimates. EBITDA margin expanded 82.5 bps y-o-y on cost rationalisation: employee expenses were down 35 bps y-o-y, ad spend 63 bps y-o-y and other expenses 11 bps y-o-y.
Adjusted PAT was up 13.8 per cent y-o-y at ₹1,580 crore, 5.6 per cent lower than estimates. At a CMP HUL is trading at 45x FY21E P/E, almost giving no value to the Glaxo portfolio, as the merged entity will have an EPS of ₹41.2. We reiterate ‘Accumulate’ with a TP ₹ 1,872 on 45x merged EPS of ₹41.2.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.