Hindustan Uniliver: A Proxy For Rural/Semi Urban India

Technically, HUL (CMP: 841) has strong positional support of around 827 zone & sustain below that 814-808-800 may be the immediate target.Consecutive closing below 800, HUL may fall up to 785-711-688-597-567 zones in the worst bear case scenerio.

On the up side, sustain above 846-867 zone, immediate target may be 888-907 area. Consecutive closing above 907, HUL may target 957-981 & 1000-1060 zone in the short to medium term. In the long term, it may scale 1105-1150 (FY:16-18) in the bullish market scenerio.

Bottom Line - Cyclical Positional Trading Levels :

	SL</>5	FROM SLR
		HUL	CMP	841
			T1	T2	T3	T4	T5	T6	T7	SLR
Strong >	827	832	846-855	867*	888	907*	922	957	981-1000	<820
Weak <	820	814	808-798	785*	744-736*	711	688	653	597-567	>827

HUL posted a Q4 result which may be above street estimate but consists of a one time exceptional profit element of Rs.179 cr which translates actual net profit of around Rs.841 cr against market expectation of around Rs.960 cr.

Topline of HUL was affected due to sluggish rural demand & also by lack of sufficient urban demand. But lower input costs (thanks to sluggish commodity cycle) helped the margin and the company utilized some higher amounts towards advertisements for necessary brand image built up for some of its products.

Going ahead, revival of demands, specially from rural & semi urban markets will be the key for HUL. Its also playing in key premium products in urban/city areas, which may also show result.

Possibility of below average monsoon in India is affecting the stock as nearly 50% of its revenue comes from rural/semi urban market. But, expected growing discretionary spending by favorable demographics in India, specially for its premium products in urban/city areas and any uptick in actual monsoon may be the key drivers of the stock.

As par BG metrics of TF valuation, median value of HUL is around 920 and projected value is around 960-1010 (FY:16-17) under the current market conditions.

SCRIP	EPS(TTM)	BV(Act)	P/E(AVG)	LONG TERM	SHORT TERM	MEDIAN VALUE	200-DEMA	10-DEMA
HINDUNILVR	19.95	15.15	50.18	902.99	931.64	917.32	814.51	867

HINDUNILVR

21.9

18.55

50.18

946.10

976.11

961.10

814.51

867

HINDUNILVR

24.35

22.75

50.18

997.62

1029.26

1013.44

814.51

867