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ICICI Securities Report
As we welcome Mr. Rohit Jawa as the new Managing Director and Chief Executive Officer of Hindustan Unilever Ltd., we believe, it is important to reflect on HUL CEOs' performance history over the past 30 plus years and outline our expectations from Rohit. History may not repeat itself, but it does often rhymes and provide valuable insights.
Our 10- point expectation from Rohit Jawa -
Accelerate growth in Nutrition portfolio, particularly Horlicks base variant consumption amongst both adults and children. HUL has already started the journey of market development through sampling (apart from other investments) and we expect gains during FY23-28 (Rohit's tenure).
HUL had lost (future) profit pools in premium beauty and personal care to startups. This trend has somewhat reversed in the last 12 months. We expect Rohit to accelerate this.
Drive inorganic growth. We believe consumer staples companies will utilise balance sheet for growth in this decade.
High-single-digit volume growth is integral to HUL’s ability to drive double digit revenue growth. Appropriate brands and value propositions may be required to drive this, particularly in the context of likely higher inflation in this decade versus last.
Creating newer brand opportunities to serve the bottom of the pyramid consumer, in our opinion.
Balancing environmental, social and corporate governance priorities and consumer awareness / affordability. Some of the ESG activities may entail higher costs. Another aspect is level playing field. For example, HUL rebranded 'Fair & Lovely' as ''Glow & Lovely ', whereas some of the larger competition didn't.
Continue to drive excellence (across functions) in digital.
Divest non-core brands and/or brands where probability of successful rejuvenation may be low. Example Pepsodent.
Driving diversity agenda further.
Unilever has recently implemented / implementing a new organisation structure. It said 'make it a simpler, more category-focused business'. Essentially, it has restructured into five business units (based on categories): beauty and wellbeing, personal care, home care, nutrition, and ice cream. In our opinion, this may reduce the decision-making independence at a country level. At this point, this analyst believes that India will be an exception (for the better).
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