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Motilal Oswal
Target: ₹2,700
CMP: ₹2,197.25
Hindustan Unilever now has 16 brands with over ₹1,000 crore in annual sales (v/s 14 brands in FY21). In FY22, its gain in market share was the highest in more than a decade.
The company continues to place the building blocks for future growth and has been able to do so ahead of its peers. It continues to display the dexterity shown over the last decade, despite its larger size, even as it continues to grow v/s its peers. Hindustan Unilever continues to strengthen the key drivers of its success in India over the last decade, including: pioneering the use of technology to generate data and facilitate decision making; focusing on decentralisation and localised strategies based on its WiMI framework; recognising trends and investing in them early on; funnelling cost savings back into the business; and its strong execution ability, which has led to a positive momentum in earnings.
The company’s pre-Covid earnings growth was particularly impressive, given the weak mid-single-digit growth posted by its (much smaller) peers over the same period. Once the ongoing high material cost environment abates, we believe the company could revert to mid-teens earnings growth.
Hindustan Unilever is the best prepared among peers on the technology as well as the e-commerce strategy front to deal with potentially-significant disruptions ahead.
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