Has To Sustain Over 835-850 For Target Of 900-950 In The Near Term
Analysts are expecting PAT around Rs.1038 cr, up by 5% (YOY) & down by 2.5% (QOQ) with QEPS around 4.80
CMP: 813
Buy on dips: 800-780
TGT: 835-850 (T+5)
TGT: 878-900-950 (6M)
TGT: 980-1035-1065 (12-24M)
TSL< 770
Note: Consecutive closing below 770-760 zone for any reason, HUL may fall up to 742-715-700-677-649-623 area, where it can be again accumulated for investment purpose.
Some Key Takeaways:
Market is expecting tepid earning for HUL in Q2 due to higher taxation, poor volume growth and steep price cuts in some of its key products recently (soaps, detergents, shampoo). But lower input costs, thanks to depressed commodity prices will be helpful for it to expand its operating margin. However, higher spending in advertising & promotions may partially offset the lower input costs (raw materials) and over all the Q2FY16 result is expected to be subdued.
Management commentary for demand outlook may be vital for rural India, considering the erratic rains this year. Although, for Q2, we may see tepid rural growth, there may be modest uptick in urban demand due to growing acceptance of its premium brands, specially in personal care segment.
Looking ahead, HUL may benefit from expected demand recovery in rural & semi urban area. It has excellent product innovations, pan India marketing & distribution strength, strong recall brand along with aggressive pricing & marketing strategy to stay ahead of competitors.
HUL is giving now more thrusts on personal care products as it contributes almost 50% of its EBIT and is also planning to go big on food & beverages business.
Recently, HUL also sold one of its subsidiary, Modern Bakery as part of its strategy to exit non-core business.
Overall, for any result oriented volatility in HUL, investors may take the opportunity to accumulate it for an ideal portfolio stock being a proxy for rural & semi urban India.
As par BG metrics & current market parameters:
Present median valuation of HUL may be around: 865(FY:15)
Projected fair valuations might be around: 905-950-1035 (FY:16-18)
| SCRIP | EPS(TTM) | BV(Act) | P/E(AVG) | Low | High | Median | 200-DEMA | 10-DEMA |
| HINDUNILVR | 19.95 | 17.21 | 45 | 868.77 | 854.83 | 861.80 | 840.73 | 813.97 |
| HINDUNILVR | 21.9 | 19.55 | 45 | 910.24 | 895.64 | 902.94 | 840.73 | 813.97 |
| HINDUNILVR | 24.35 | 22.25 | 45 | 959.81 | 944.41 | 952.11 | 840.73 | 813.97 |
| HINDUNILVR | 28.6 | 25.35 | 45 | 1040.20 | 1023.51 | 1031.86 | 840.73 | 813.97 |
Analytical Charts:
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