KRChoksey report on Hindustan Unilever (HUL)
"Hindustan Unilever (HUL) reported net sales growth of 11% Y-o-Y and -1% Q-o-Q to Rs. 7640Crs. for Q2FY15. Domestic consumer business grew ahead of market at 10%, led by underlying volume growth of 5%. EBITDA margins for Q2FY15 saw an improvement by 51bps Y-o-Y but were down by 80bps Q-o-Q to 16.3%. Net profit for the quarter grew by 8% Y-o-Y but remained down by 6% Q-o-Q to Rs.988 Crs. PAT margin was drop by 32bps Y-o-Y and by 76bps Q-o-Q to 12.9% due to high depreciation charge because of change in depreciation method."
"Overall markets is challenging for HUL with passive market growth and high inflation but with emphasis and focus on market development and innovations in category, well positioned brands, consistent operating efficiency HUL will continue to grow at 9% in FY15E and 10% FY16E and our overall view on the FMCG sector remains positive mainly based on assumption of improving consumer sentiments and increased consumption. The stock is currently trading at a P/E of 38.5x and 36.4x its FY15E and FY16E earnings. We maintain our HOLD recommendation on the stock with a target price of Rs 753 giving an upside potential of 4.6%," says KRChoksey research report.
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