Emkay Global Financial has given Hold recommendation for Hindustan Unilever with a target price of Rs. 2700 in its research report issued on Sep 12, 2021
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.
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.