Hindustan Unilever - Brands' strength driving growth; valuation expensive - ICICIdirect

Hindustan Unilever (HUL) is the brands behemoth of the Indian FMCG industry. Over the years, HUL has built a leadership position in the soaps, detergents, personal products and coffee segment along with a vast basket of ~35 brands spanning across 20 different categories.

Being the country's largest FMCG player, HUL's revenue growth has been supported by the changing demographic profile of Indian consumers, increasing per capita income & rising affluence of consumers. HUL's sales growth ratio to that of India's GDP growth has risen from ~1.0x (FY04-10) to 1.5x (FY11-12). We expect the ratio to trail at these levels with revenues and earnings growing at a CAGR of 11.4% and 12.6%, respectively, in FY12-14E.

We are initiating coverage on HUL with a HOLD rating.

Source : Equity Bulls

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