Hindustan Unilever - Q1FY21 Result Update - ICICI Securities

Hindustan Unilever (HUL) reported 4.4% revenue growth with the inclusion of acquired brands (Horlicks, Boost) revenue. On a like to like basis, revenue fell 7% with 8% volume dip. Despite manufacturing & supply chain disruption in April, May, the home care segment saw mere 2.1% decline in revenues. The company has been able to refill the distributor pipeline by June 2020 to pre-Covid levels. Beauty & personal care segment (BPC) segment saw 12.0% sales decline severely impacted by cosmetics, skin care & deodorants. However, soaps, sanitisers saw a strong surge in demand. The company has augmented hand wash capacity by 5x to meet the surge in demand aided by increasing hygiene awareness. Foods & refreshments category grew 52% with the inclusion of acquired brands sales. On a like to like basis, revenues fell 4% with ice-cream business severely impacted by lockdown. However, ketchup, tea & coffee witnessed strong double digit growth with increasing in-home consumption. Operating margins contracted 113 bps with 220 bps shrinkage in gross margins. The reduction in A&P spend by 393 bps partially offset the operating de-leverage impact on other costs. Net profit increased 7.2%.

Valuation & Outlook

The strong performance in unprecedented quarter shows resilience of FMCG business. We expect HUL to be able to leverage structural demand trends in health & hygiene space with strong brands (Lifebuoy, Surf excel, Domex, Vim). We also expect strong growth in packaged foods, tea, coffee to continue in medium term. Maintain HOLD with revised TP of Rs. 2410.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_HUL_Q1FY21.pdf

Shares of HINDUSTAN UNILEVER LTD. was last trading in BSE at Rs.2319.1 as compared to the previous close of Rs. 2330.35. The total number of shares traded during the day was 117262 in over 6661 trades.

The stock hit an intraday high of Rs. 2350 and intraday low of 2308.65. The net turnover during the day was Rs. 272682050.

Source : Equity Bulls

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