Broker's call: HUL (Accumulate)

| Updated on May 05, 2021

IDBI Capital

HUL (Accumulate)

Target: ₹2,607

CMP: ₹2,394.90

Hindustan Unilever (HUL) Q4FY21 result was above our estimates. Revenue on comparable basis, grew 21 per cent y-o-y (+16 per cent y-o-y volume growth) driven by continued double-digit growth momentum in health, hygiene and nutrition portfolio.

Gross margin declined for the fourth consecutive quarter due to raw material cost inflation. Inflation in palm oil price has been alarming (40-50 per cent y-o-y); however, HUL has taken 7-8 per cent price hike to offset the same. As per our channel check, HUL has taken 13-20 per cent hike in select SKUs of key brands— Lifebuoy, Rexona, Liril etc. Positively, HUL has launched ₹2 sachets in Horlicks and Boost brands to drive market development and penetration in HFD category.

During current pandemic, HUL is better prepared compared to last crisis. As on date, 90 per cent of eligible employees have already received first doze of the vaccine.

We maintain our earnings estimates for FY22-23E.

HUL derives over 80 per cent revenue from health and hygiene while 15 per cent from discretionary and 5 per cent from out of home. We expect moderate impact on out-of-home portfolio which is already baked in our estimates. We maintain ‘Accumulate’ rating with a target price of ₹2,607.

Published on May 05, 2021

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