Dec 05, 2018, 02.31 PM IST
Phillip Capital (India) has a buy call on Hindustan Unilever (HUL) with a target price of Rs 2,160.
The current market price of HUL is Rs 1,830.05.
Time period given by the brokerage is one year when HUL price can reach the defined target.
Investment rationale by the brokerage:
Post our downgrade two quarters back, HUL stock has remained sideways given concerns of base catching up and sustainability in gross margin improvement. We believe concerns relating to RM inflation are behind us given sharp correction in crude oil price and in our view, GSK consumer acquisition is step in right direction and upgrade our rating to BUY with a target price of Rs 2,160 (50x FY21 EPS) vs. Rs 1,760 (50x Dec-20 EPS). We increase HUL Revenue/Ebitda and Net income FY21 estimates by 12/ 27/29 per cent respectively as it has all levers in place to make acquisition work to its advantage. Kindly note that we have not considered amortization on goodwill in our financial nos and even if has to consider it, it wont affect adjusted net income (as in case Emamis acquisition of Kesh King) and net results remain the same.
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