Hindustan Unilever Ltd - Result Update - REDUCE - TP Rs.1278 - Kotak

HUL's 2QFY19 operating earnings were in-line with our estimates, while reported PAT came in 7% ahead of estimates (higher other income, and lower effective tax rate). Our earnings estimates are revised modestly upward. We believe revenue visibility has improved since last quarter (as the uncertainties associated with GST are overcome); however, higher input costs (crude-related) limit upside risks on near-term earnings. Valuations of HUL have expanded to c. 44X FY19E - while the valuation of HUL could remain elevated (likely 40-45X FY19E, over the next 2-3 quarters), we believe the case for a significant upside is limited. We revise our price target to Rs 1278 (Rs 1216 earlier) as we raise our valuation multiple to 44X FY19E PER (42X earlier). On limited downside, we downgrade the stock to REDUCE. We would advise investors to sell the stock into rallies.

Shares of HINDUSTAN UNILEVER LTD. was last trading in BSE at Rs.1257 as compared to the previous close of Rs. 1271.35. The total number of shares traded during the day was 30702 in over 913 trades.

The stock hit an intraday high of Rs. 1269.7 and intraday low of 1248.1. The net turnover during the day was Rs. 38569831.

Source : Equity Bulls

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