Deutsche bank, HUL Hold -Namaste India Conference Highlights

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HUL Hold
Namaste India Conference Highlights


Namaste India conference highlights:
* Volume growth higher than the market volume growth, will likely continue
to be the key focus area for HUL going forward. The above average volume
growth will result from new products from existing categories and increased usage for existing products.
* For achieving above average growth, HUL would be willing to sacrifice
operating margins in the short term for long term market share gain.
* The focus would be on masstige brands which fill the gap between prestige and mass market.
* HUL will likely continue to spend on the brands and invest in creation of
new products in existing categories. The average advertisement to sales
ratio over the last 5 quarters has been 14.5% and should continue to remain
around that range.
* The company is increasingly focusing and allocating resources at the premium end of product categories relative to the lower end of the range as
the premium products have higher margins.
* Price war in laundry category continues. Despite that, the company has
been able to grow laundry revenues by 7% (double digit volume growth
with a price cut).
* The volume growth in HPC categories has been lower than some of the
newer categories.
* The management believes that at some point in time FDI in retail will be
allowed.
* Implementation of GST is still 12-18 months away. Realizing the benefits
of GST would take another 3 years.
Maintain HOLD with a target price of INR 266.