Pedestrians walk past an advertisement for Lakme Salon, operated by Hindustan Unilever Ltd. (HUL) in the Churgate Station area of Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Home Care Segment To Drive Growth For HUL

The home care segment, which contributed nearly a third to Hindustan Unilever Ltd.’s revenue in financial year 2017-18 will continue to remain a key growth driver, especially as the company adds more premium products to its range.

That’s what the fast-moving consumer goods company said in its annual meet addressing industry research analysts. The management said that even as Surf Excel enjoys high market share given that its penetration is in single digits, there is scope for the brand to grow. The company’s liquid and fabric conditioners are growing at three times the industry and it has begun to invest in toilet cleaners too.

HUL devises its strategies based on clusters or regions. That’s helped the company address consumer demand and competition at a local level, broking firm Jefferies said in a report after the annual meet.

Here are other highlights:

  • The company will use data analytics and technology to build and maintain competitive moat.
  • HUL has posted 11 percent volume growth in each of the two previous quarters.
  • It will now use algorithms to keep volumes steady to lead sales and drive cost efficiencies to expand margins.
  • Company has executed two key tools – ‘Live Wire’ and ‘Jarvis’ – which use data analytics.
  • These tools “improve speed and accuracy of decision making” in areas ranging from pricing, promotions and advertising to trade spends, Credit Suisse said.

Shares of HUL currently trade near lifetime highs and Bloomberg consensus projects a price to earnings ratio of 55 times for financial year 2018-19. While 65 percent of 46 analysts polled by Bloomberg consensus have a ‘buy’ rating on the stock, the return potential from current market levels indicates an upside of only 1 percent.

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