Hold Hindustan Unilever; target of Rs 1887: Edelweiss
Edelweiss’ research report on Hindustan Unilever
Hindustan Unilever’s (HUL) Q1FY19 revenue, EBITDA and adjusted PAT growth of 11.2%, 20.6% and 22.5%, respectively, came in line with our estimates. The 12% YoY volume growth also came in line with our estimate. What’s even more encouraging is that the growth was broad based aided by gradual improvement in demand. Gross margin expanded ~197bps on account of favourable mix and judicious pricing. EBITDA margin also rose 185bps YoY despite ad spends jumping 27.4% YoY (up 155bps YoY)—the right strategy in our view.
New launches, performance of Indulekha & Ayush and revival of rural demand are potential triggers. Maintain ‘HOLD’ as from current level (52.7x FY20E EPS), the stock offers limited upside.
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