Axis Securities
Target: ₹2,550
CMP: ₹2,237.70
Hindustan Unilever is India’s largest fast-moving consumer goods company with well-renowned household products. With 44 brands spanning 14 distinct categories such as soaps, detergents, shampoos, skin care, toothpaste, deodorants, cosmetics, tea, coffee, etc. , the Company is a part of everyday life-consuming goods. The portfolio includes leading household brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Glow & Lovely, Pond’s, Vaseline, etc.
Axis Securities believes near-term margin delivery is likely to be impacted owing to RM inflation and the management’s strategy of prioritising volumes over profitability for a couple of quarters. The outlook on demand is improving and the management is geared to deliver a healthy volume growth alongside share gains. HUL will invest in its brands, build on capabilities, maintain competitive spends even as it continues to look at all levels of cost savings, and take judicious price hikes to manage margins in the near term.
From a medium-term perspective, we believe HUL has the right growth matrix like a broad-based portfolio across the e-value matrix, continued cost savings agenda, growing traction in GSK-CH business, and execution prowess. Given the volatile market outlook and stable and visible earnings growth,HUL could perform over the long-term.