KR Choksey has given Accumulate recommendation for Hindustan Unilever with a target price of Rs. 2834 in its research report issued on Oct 21, 2021

KR Choksey’s research report on Hindustan Unilever

HUL reported revenue growth of 11.7% YoY (+7% QoQ) at INR 130,460 Mn driven by double digit growth in Home Care and Beauty & Personal care segment. Gross Margins declined by 140 bps YoY impacting from higher input cost. EBITDA stood at INR 32,260 Mn (+10.3% YoY), with EBIDTA Margin at 24.7% (-30bps YoY), the contraction in margin was mainly due to higher input cost which was partially offset by cost saving measures and operational efficiency. PAT for the quarter was at INR 21,850 Mn (+10.7% YoY), with NPM at 16.7% (-20bps YoY). The company has declared an interim dividend of INR 15 per share for FY22.

Outlook

We assign a P/E multiple of 54.5x (earlier 62x) to the FY24E EPS of INR 52 (earlier FY23E EPS of INR 44.5) to arrive at a target price of INR 2,834 per share, an upside of 14.3%. We maintain our positive outlook on HUL and assign ‘ACCUMULATE’ rating to the stock.

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