BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
ICICI Securities Report
Underlying volume growth of Hindustan Unilever Ltd. has been a tad underwhelming in recent times (volumes declined by 1% in nine months FY21).
A change in stance at HUL in favor of volume growth, in our opinion, will be a key driver for HUL stock’s outperformance in 2021.
In India, a ‘growth market’, investors tend to (rightly) ignore short-term profit sacrifice, provided the trajectory of volume outperformance is clear (as it’s DCF-accretive).
Also in our view, the likely cannibalization of 500gm refill pack by 500gm pouch pack in nutrition portfolio imply either a steep gross margin decline and/or re-investment of potential synergy benefits from GlaxoSmithKline Consumer Healthcare Ltd.’s acquisition.
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