We are upgrading our recommendation on Unilever Plc (UL) to Outperform from Neutral based on impressive third quarter 2012 results. Despite high input costs and a tough currency environment, Unilever posted healthy underlying sales growth of 5.9% on the back of both volume and pricing gains. Increased investment in innovation and brand-building also contributed to the growth. Organic sales in the emerging markets improved as well. The company maintained its dominant market share in all its business segments and recorded decent growth in spite of the global economic crisis. We are encouraged by Unilever's solid fundamentals and a wide portfolio of globally recognized flagship brands. Moreover, continuous innovation in all the segments adds to its growth prospects.