Sharekhan has given Buy recommendation for Hindustan Unilever with a target price of Rs. 2850 in its research report issued on Sep 16, 2022
Sharekhan’s research report on Hindustan Unilever
Driving growth in core categories through premiumisation, market development through new launches, cluster-based approach through WIMI strategy and expansion of distribution network remain key growth drivers. Revenues to clock CAGR of 14% over FY2022-24. Consistent fall in key input prices (palm oil prices corrected by 50% from highs) and price hikes will help margins improve from H2FY2023. Balance sheet stays strong on steady fall in working capital days (by 12 days in FY2022) and consistent improvement in cash flows and higher dividend payout (90% in FY2022).
We maintain a Buy rating on Hindustan Unilever Ltd (HUL) with an unchanged PT of Rs. 2,850. Leadership position in 80% of portfolio, improving growth outlook and a healthy balance sheet with consistent cash flows makes it a best pick in FMCG space. Stock trades at 59.0x/48.9x its FY2023E/24E EPS.