HINDUSTAN UNILEVER LIMITED

Hindustan Unilever Limited - Company Profile

Incorporated in the year 1933, Hindustan Unilever Limited (HUL) is a Fast Moving Consumer Goods (FMCG) company. Hindustan Unilever Limited (HUL) has a diversified presence in the FMCG sector with more than 35 brands spanning 20 distinct categories including soaps and detergents, shampoos, skin care, toothpastes, and packaged foods. British-Dutch company Unilever PLC and its Affiliates are the promoters of HUL and own 52.5 % shares in the Company (On 30 April 2013, Unilever PLC announced plans to increase its stake in the Company to 75 % by way of an open offer).

Over the years, Hindustan Unilever Limited (HUL) has grown substantially by acquiring landmark brands and has managed to maintain its dominant market position in various categories. Hindustan Unilever Limited (HUL) portfolio includes leading household brands including Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Pond’s, Vaseline, and Lakme.

Hindustan Unilever Limited - STOCK INFORMATION

Hindustan Unilever Limited - STOCK FUNDAMENTALS

Hindustan Unilever Limited - INVESTMENT RATIONALE

Being the country’s largest FMCG player, Hindustan Unilever Limited (HUL) volume growth has decelerated in line with the economic downturn. Volume growth has declined from ~13% (FY11) and ~9% (FY12) to ~4% in FY14. The slowdown is largely on the back of a slowdown in urban discretionary demand with rural growth remaining healthy. Going ahead, we believe volume growth would remain muted until FY15E led by the slower revival in GDP growth and persistently high food inflation. However, we believe that as the economy revives and growth gains traction Hindustan Unilever Limited (HUL) strong portfolio of brands across segments would aide the company’s volume growth back to 6-7% annually.

Hindustan Unilever Limited (HUL) PP (~29% of revenues, ~46% of PBIT in FY14) growth at 14.8% CAGR (FY09-13) has been largely led by volumes fol- lowing lower penetration of oral, hair & skin care products in India and HUL’s strengthening presence across these segments led by its strong brands, Fair & Lovely, Ponds, Lakme, Clinic Plus, Close-Up, etc. However, following the slowdown in discretionary demand, increasing competition in PP segment and rejig in Hindustan Unilever Limited (HUL) largest PP brand (Fair & Lovely)

SHAREHOLDING PATTERN

OUTLOOK&VALUTION

Axis Bank We expect the near term slowdown to keep Hindustan Unilever Limited (HUL) growth moderate until H1FY15. However, with a revival in urban demand and strong brands in growing aspirational segments, we believe HUL is strongly placed to capture the booming consumer demand. We value the stock at 35x FY16E EPS of 21.6 arriving at a target price of 780-790 levels.

RESULTS (Quarterly )(Rs CR.)

TECHNICAL VIEW

Hindustan Unilever Limited (HUL) is looking strong on charts. We advise to buy around 750-760 with stoploss of 730 for the targets of 780- 790 levels. RSI is also showing upside momentum in it on weekly charts.

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