Motilal Oswal: HUL - Staples Remains Resilient With Recovery In Discretionary Segment 
A store attendant sits beneath sachets of Hindustan Unilever Ltd. Sunsilk shampoo, Comfort fabric softener, Dove shampoo displayed for sale at a store in Mumbai. (Photographer Kuni Takahashi/Bloomberg)

Motilal Oswal: HUL - Staples Remains Resilient With Recovery In Discretionary Segment 

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Motilal Oswal Report

We interacted with the management of Hindustan Unilever Ltd. for an update on overall market conditions. Here are the key takeaways from our discussion:

Essentials Versus Discretionary

Background: 80% of the portfolio comprising essentials – such as soaps, detergents, tea, oral care, etc. – grew at 6% in Q1 FY21.

Of the remaining 20% portfolio, 15% declined by 45% while the rest 5% declined by 69% during the quarter.

In Q2 FY21, the essentials-led portfolio (80%) continued to be resilient.

Skin care – the largest segment of the remaining 20% portfolio – performed poorly in Q1 FY21, but has started to recover consistently since June (although it is yet to turn positive YoY).

Recovery has also been seen in the Water Purifier business, which was adversely affected in Q1 FY21.

With the ice-cream business being a washout in Q1 FY21, it contributed significantly to business decline in the quarter.

However, the ice-cream business is much less salient in the base quarter of Q2 FY21 (Q2 FY20) versus Q1 FY21.

Therefore, Q2 FY21 is not expected to be as drastically impacted by the ice-cream business as Q1 FY21.

Click on the attachment to read the full report:

Motilal Oswal Hindustan Unilever Company Update.pdf

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