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The Corner Office: Exciting growth prospects ahead

  • Growth opportunities remain high (especially driven by the aforementioned trends) even in its largest categories and brands. Rural outlook is also turning positive.
  • HUVR remains our top large-cap pick among the rural consumer recovery plays. Our preference for HUVR is driven by a multitude of factors, as highlighted in our rural strategy reports released in Nov'2017 and Aug'2017. For HUVR, we expect 18.6% PAT CAGR over FY17-19, as against a CAGR of 6.1% over the last three years, 10.6% over the last five years and 10.7% over the last 10 years. Valuations are not cheap at 47.6x/40.6x FY19/FY20E EPS; however, given the potentially strong earnings growth, we believe the premium valuations are justified, particularly as return ratios and dividend yield are best-of -breed. We maintain our Buy rating on the stock, and also our target price of INR1,500 (48x December 2019E EPS; 10% premium to three-year average valuations).