Buy Hindustan Unilever, target price Rs 2,950: Nomura

Nomura, India has buy call on Hindustan Unilever with a target price of Rs 2,950.

Hindustan Unilever, incorporated in the year 1933, is a Large Cap company (having a market cap of Rs 4,68,050.33 crore) operating in the FMCG sector.

Investment Rationale

Notwithstanding near-term pressure on margins and volumes, Nomura believes the company’s long-term story is intact. The brokerage expects HUL’s core categories to be relatively resilient and price-value equation of products to continue to tilt towards organized companies leading to share gains in an inflationary environment.

HUL has one of the better arsenals vs peers in the FMCG sector to land frequent price hikes, play the price-point portfolio pyramid and clawback margins. Nomura expects HUL to benefit from demand uncoiling in out-of-home categories and support volumes as mobility increases with educational institutions and offices opening up.

The brokerage expects HUL’s enhanced digital capabilities to widen its competitive lead vs peers and believe it is taking the correct steps to succeed in the emerging segment of D2C/ digital-first products.

Nomura maintains a Buy rating with FY22-24F EPS CAGR of c.17%.

Financials
For the quarter ended 31-12-2021, the company has reported a Consolidated Total Income of Rs 13499.00 Crore, up 3.05 % from last quarter Total Income of Rs 13099.00 Crore and up 10.33 % from last year same quarter Total Income of Rs 12235.00 Crore. Company has reported net profit after tax of Rs 2300.00 Crore in latest quarter.

Promoter/FII Holdings
Promoters held 61.9 per cent stake in the company as of 31-Dec-2021, while FIIs owned 16.98 per cent, DIIs 8.6 per cent.