HSBC recommends 'overweight' rating on Hindustan Unileve
HSBC recommends ‘overweight’ rating on Hindustan Unilever (HUL) with a target price of Rs 277.
By ET Bureau |
HINDUSTAN UNILEVER
RESEARCH: HSBC
RATING: OVERWEIGHT
CMP: RS 245
HSBC recommends ���overweight��� rating on Hindustan Unilever (HUL) with a target price of Rs 277. Crude and palm oil prices have declined by 30% in the past 3-4 months.
Palm oil is the main input for soap manufacture, while crude oil affects other inputs such as packing materials and linear alkyl benzene.
The correction in commodity prices will not be meaningfully reversed in the near term and will impact HUL���s bottomline positively.
Hence, HSBC increases its ���08 EPS estimates by 2.9% and ���09E EPS by 4.4%. It estimates that HUL���s topline growth will slow to 11.8% next year from 18% estimated this year, as both volume and price growth moderate from current levels.
However, benign commodity prices will result in margin expansion, and bottomline growth is expected to be 18.5% next year, which is higher than this year���s 17.1%.
HSBC values HUL at a price-to-earnings (P/E) multiple of 25x December ���09E. There is likely to be high demand for HUL as a large-cap defensive stock.
RESEARCH: HSBC
RATING: OVERWEIGHT
CMP: RS 245
HSBC recommends ���overweight��� rating on Hindustan Unilever (HUL) with a target price of Rs 277. Crude and palm oil prices have declined by 30% in the past 3-4 months.
Palm oil is the main input for soap manufacture, while crude oil affects other inputs such as packing materials and linear alkyl benzene.
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The correction in commodity prices will not be meaningfully reversed in the near term and will impact HUL���s bottomline positively.
Hence, HSBC increases its ���08 EPS estimates by 2.9% and ���09E EPS by 4.4%. It estimates that HUL���s topline growth will slow to 11.8% next year from 18% estimated this year, as both volume and price growth moderate from current levels.
However, benign commodity prices will result in margin expansion, and bottomline growth is expected to be 18.5% next year, which is higher than this year���s 17.1%.
HSBC values HUL at a price-to-earnings (P/E) multiple of 25x December ���09E. There is likely to be high demand for HUL as a large-cap defensive stock.
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