Citigroup puts 'hold' rating on Hindustan Unilever
Citigroup believes HUVR will sacrifice market share, rather than invest heavily in low growth categories and lower end brands which will continuously face the threat of consumer downtrade.
By ET Bureau |
HINDUSTAN UNILEVER
RESEARCH: CITIGROUP
RATING: HOLD
CMP: RS 256
Hindustan Unilever (HUVR)���s market share in soaps was ~46% in Q1FY10. Citigroup estimates ~30-35 % is concentrated between two brands, Lux & Lifebuoy, whilst the remainder is split between Dove, Pears, Hamam, Rexona , Liril, etc. Over the next two-three years, the growth aspirations of regional players will challenge both meaningful share gains and returns for HUVR���s smaller brands.
If HUVR embarks on this share protection strategy, it will have to sacrifice margins or make low return investments. Over the next two-three years, these brands should continue to generate relatively lower returns for HUVR.
Citigroup believes HUVR will sacrifice market share, rather than invest heavily in low growth categories and lower end brands which will continuously face the threat of consumer downtrade. Citigroup expects HUVR���s brand spends to accelerate - especially as it seeks to augment market share in skin and oral care.
RESEARCH: CITIGROUP
RATING: HOLD
CMP: RS 256
Hindustan Unilever (HUVR)���s market share in soaps was ~46% in Q1FY10. Citigroup estimates ~30-35 % is concentrated between two brands, Lux & Lifebuoy, whilst the remainder is split between Dove, Pears, Hamam, Rexona , Liril, etc. Over the next two-three years, the growth aspirations of regional players will challenge both meaningful share gains and returns for HUVR���s smaller brands.
If HUVR embarks on this share protection strategy, it will have to sacrifice margins or make low return investments. Over the next two-three years, these brands should continue to generate relatively lower returns for HUVR.
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Citigroup believes HUVR will sacrifice market share, rather than invest heavily in low growth categories and lower end brands which will continuously face the threat of consumer downtrade. Citigroup expects HUVR���s brand spends to accelerate - especially as it seeks to augment market share in skin and oral care.
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