HUL - Channel Checks Suggest An Upturn In Demand; Retaining A 'Buy': Anand Rathi

Anand Rathi Report

Our channel checks suggest an upturn in demand for Hindustan Unilever Ltd., helped by the introduction of modern trade ranges/stock keeping units (such as select larger packs) along with similar promotions in general trade.

While rural demand is still soft (but improving QoQ), the company’s efforts are yielding results. Recent management changes and the division of beauty and personal care into beauty and wellbeing and personal care would bring shift in the focus on fast-growing segments.

We are enthused about HUL’s growth prospects, aided by healthy gross margin expansion (370 basis points) in FY24 and the stock trading at an attractive 46 times FY25E.

We retain our 'Buy' rating with a 12-month target price of Rs 3,300, 55 times FY26E earnings per share, ~31% potential.

Key risks:

A sharp rise in input costs, pricebased competition or loss of market share due to Reliance Consumer entering the field.

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