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Hindustan Unilever (HUL) has tied up with Reliance Industries (RIL) to set
up beauty stores within Reliance Hypermarkets. The former has been,
over the past few years, aggressively tapping new retail formats and
outlets to improve distribution, enhance brand visibility and gain direct
access to end consumers via Lakme salons (~150), Swirl ice‐cream parlors
(200+) and BRU World café (8). The current tie up will ensure high
visibility to HUL’s premium products (Dove and Sunsilk). The stores will
begin operations in Mumbai in May and will be subsequently expanded
across India within three months. We believe this direct interface with
end consumers will boost the HUL brand positively and help the company
stay one step ahead of competition. Maintain ‘BUY’.
Tie up with Reliance a win win for both players
This will be win‐win for both HUL and RIL. The latter is currently one of the few well
funded retailers in India as most other players are facing severe debt burdens and are
cutting back on expansion. The tie up will help HUL tap a sharp scale up in retail
presence. Unilever has successfully undertaken such tie‐ups globally (alliance with
Carrefour in China).
HUL’s premium products to gain visibility
HUL will also have product display counters for specific products (Dove, Sunsilk etc).
Stores will have an innovative concept of assisted selling under which specialists in skin
care, hair care and ayurveda (trained mostly by HUL) will help consumers make the
right choices while buying products. While 50% of the products in stores will be
Unilever's, offerings from other companies, which fit the bill, will also be stocked.
Outlook and valuations: Positive; maintain ‘BUY’
We believe such direct interface with end consumers will boost the brand positively
and help HUL stay one step ahead of competition. The company has still not seen any
significant signs of slowdown/downtrading and has been effecting regular price hikes.
The stock is trading at 28.8x and 24.6x FY13E and FY14E EPS, respectively. We
recommend ‘BUY’ with ‘Sector Outperformer’ on relative return basis.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Hindustan Unilever (HUL) has tied up with Reliance Industries (RIL) to set
up beauty stores within Reliance Hypermarkets. The former has been,
over the past few years, aggressively tapping new retail formats and
outlets to improve distribution, enhance brand visibility and gain direct
access to end consumers via Lakme salons (~150), Swirl ice‐cream parlors
(200+) and BRU World café (8). The current tie up will ensure high
visibility to HUL’s premium products (Dove and Sunsilk). The stores will
begin operations in Mumbai in May and will be subsequently expanded
across India within three months. We believe this direct interface with
end consumers will boost the HUL brand positively and help the company
stay one step ahead of competition. Maintain ‘BUY’.
Tie up with Reliance a win win for both players
This will be win‐win for both HUL and RIL. The latter is currently one of the few well
funded retailers in India as most other players are facing severe debt burdens and are
cutting back on expansion. The tie up will help HUL tap a sharp scale up in retail
presence. Unilever has successfully undertaken such tie‐ups globally (alliance with
Carrefour in China).
HUL’s premium products to gain visibility
HUL will also have product display counters for specific products (Dove, Sunsilk etc).
Stores will have an innovative concept of assisted selling under which specialists in skin
care, hair care and ayurveda (trained mostly by HUL) will help consumers make the
right choices while buying products. While 50% of the products in stores will be
Unilever's, offerings from other companies, which fit the bill, will also be stocked.
Outlook and valuations: Positive; maintain ‘BUY’
We believe such direct interface with end consumers will boost the brand positively
and help HUL stay one step ahead of competition. The company has still not seen any
significant signs of slowdown/downtrading and has been effecting regular price hikes.
The stock is trading at 28.8x and 24.6x FY13E and FY14E EPS, respectively. We
recommend ‘BUY’ with ‘Sector Outperformer’ on relative return basis.
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