Hold Hindustan Unilever; target of Rs 2700: Emkay Global Financial

Emkay Global Financial recommended hold rating on Hindustan Unilever with a target price of Rs 2700 in its research report dated September 12, 2021.

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Emkay Global Financial’s report on Hindustan Unilever

HUL’s annual investor meet highlighted emerging trends, the company’s growth initiatives across categories, and its R&D and digital prowess. Management remains upbeat on the medium-term growth outlook and expects to maintain double-digit EPS growth. The commentary emphasized significant leverage on data analytics and technology across functions, which will be a competitive advantage, going ahead. We expect some improvement in growth as increasing mobility could drive a recovery in the laundry/beauty segments, which we have factored in our forecasts as well. Post the recent run-up (61x/54x FY23/24E EPS), limited upside potential keeps us neutral on the name. We await a more visible pick-up in earnings growth after recent underperformance vs. peers.

Outlook

Maintain Hold with a Sep’22E TP of Rs2,700, valuing it at 55x Sep-23E EPS (47x Sep-23E EPS earlier). Correction in key commodity prices can offer upsides to forecasts whereas rural slowdown remains a risk.

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