HUL braves slowdown, premium valuation to sustain on Street's thumbs up

Revised target price indicates upside of 7-10% from current level

Hindustan Unilever (HUL) seems to have braved the slowdown storm that has impacted some consumption stocks. 

The HUL stock, which hit its all-time high of Rs 2,271 on Wednesday, has gained over 11 per cent since January-end, compared to a sub-1 per cent rise in the Nifty FMCG index. Its current market capitalisation is close to the Rs 5-trillion mark.

What is making the stock tick is the expectation of healthy profitable growth despite a large base, and strong return ratios. This should support valuation, which, at 56x its FY21 estimated earnings, is at a 24 per cent premium to its long-term