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Research
Hindustan Unilever - Another shot at premiumisation - Edelweiss
Posted On : 2012-08-03 20:42:27( TIMEZONE : IST )
Hindustan Unilever (HUL), in a bid to further cement its position in the personal care segment, is likely to launch its hair care (shampoo and conditioner) brand TRESemme in India. India will be the second country after Brazil where the brand will be launched, signifying the country's importance to Unilever. TRESemme, positioned as a premium brand (HUL is present in mass-premium category through Dove), will position HUL at all price points in the hair care portfolio and target urban consumers looking for a salon-like experience. With changing lifestyles and premiumisation, the company is betting big on salonisation, which could be tapped through TRESemme. We expect the company to march a steal over competition on back of its focus on innovation, premiumisation and softness in competitive intensity of major competitor (P&G in India) which will boost margins (S&D margins have been on the rise over past few quarters; shampoo likely to follow suit). Maintain 'BUY'.
TRESemme to bridge portfolio gap
Hair care brand TRESemme (Unilever acquired it from Alberto Culver in 2010), globally available in a range of shampoos, conditioners and styling products, is likely to be launched in India to target the urban market. The brand will be available in enlisted salons as well. Though HUL is the leader in hair care category, the gap between premium and mass is quite large, and TRESemme will help bridge this gap.
Premiumisation play
In Q1FY13, HUL's hair care portfolio posted double digit growth (Dove shampoo volume doubled and conditioners continued with high growth). We believe TRESemme to add to this growth momentum and aid margin expansion via its premium positioning.
Outlook and valuations: Positive; maintain 'BUY'
HUL remains one of our top picks in the consumer space. At CMP, the stock is trading at 31.0x and 27.0x on FY13E and FY14E, respectively. We reiterate 'BUY' on the stock and recommend 'Sector Outperformer' rating on relative return basis.
