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HUL
Performance Highlights
Quarterly results (standalone)
(` cr) Revenue EBITDA OPM (%) Recurring PAT
Source: Company, Angel Research
NEUTRAL
CMP Target Price
Investment Period
2QFY2012 5,522 738 13.4 645 % yoy 11.5 11 (3)bp 25.0 Angel Est. 6,155 819 13.3 718 % Diff 0.0 0 4bp 12.3
`546 -
Stock Info Sector Market Cap (` cr) Net Debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code FMCG 118,062 (5,861) 0.4 580/348 250,516 1 18,636 5,666 HLL.BO HUVR@IN
Hindustan Unilever (HUL)s top-line for 2QFY2013 grew by 11.5% yoy to `6,155cr, in-line with our estimates. The recurring net profit for the quarter grew by 25.0% yoy to `805cr, aided by an 83.2% yoy growth in other income to `304cr. However, the underlying volume growth of 7% in the domestic FMCG business is a disappointment. We remain Neutral on the stock. Key highlights during the quarter: The domestic consumer business grew by 16%, with the underlying volume growth coming in at a modest 7%. While the soaps and detergents segment grew by 22% yoy, the personal products segment was up by 12% yoy. The foods division rose by 10% yoy. The management indicated that the overall growth in the quarter was impacted by budget rationalization in the canteen stores department (CSD). The OPM stood at 13.3%, which again was inline with estimates. The gross margins rose by 123bp yoy aided largely by price hikes. HUL increased its advertising and promotion expenses during the quarter, which went up by `118cr on a yoy basis to `769cr. The bottom-line rose by 25% yoy to `805cr aided by an 83.2% yoy growth in other income to `304cr (vs `166cr in 2QFY2012). Outlook and valuation: We expect HUL to post a ~15.5% CAGR in its top-line over FY2012-14E, largely aided by steady performance of all its major divisions. In terms of earnings, we expect HUL to post a 19.7% CAGR. At the current market price, the stock is trading at 32.0x FY2014E earnings. We maintain our Neutral view on the stock.
Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 52.5 9.0 21.4 17.0
3m 10.7 17.5
FY2011 19,401 10.7 2,099 (0.2) 12.2 9.7 51.1 44.4 80.1 80.3 6.0 49.0
FY2012 21,736 12.0 2,573 22.6 13.4 11.9 43.9 33.6 83.4 74.2 5.3 39.3
FY2013E 25,350 16.6 3,185 23.8 13.3 14.7 37.1 29.3 84.5 76.1 4.5 33.7
FY2014E 28,974 14.3 3,685 15.7 13.5 17.0 32.0 20.7 75.8 63.5 3.9 28.8
V Srinivasan
022-39357800 Ext: 6831 v.srinivasan@angelbroking.com
2QFY2013 6,155 3,269 53.1 330 5.4 769 12.5 965 15.7 5,334 821 13.3 6.3 58 304 1,061 2 1,063 17.3 256 24.1 805
2QFY2012 5,522 3,001 54.4 287 5.2 651 11.8 844 15.3 4,784 738 13.4 0.5 57 166 847 44 891 16.1 202 23.9 645
% chg 11.5 8.9 15.0 18.1 14.3 11.5 11.2 (3) 1,072.2 1.0 83.2 25.4 19.3 26.7 25.0
1QFY2013 6,250 3,368 53.9 333 5.3 820 13.1 892 14.3 5,412 838 13.4 5.3 58 347 1,122 605 1,727 27.6 396 35.3 727
% chg (1.5) (2.9) (0.7) (6.2) 8.2 (1.4) (2.0) (6) 19.9 0.2 (12.4) (5.4) (38.4) (35.3) 10.8
1HFY2013 12,406 6,637 53.5 663 5.3 1,589 12.8 1,857 15.0 10,746 1,659 13.4 12 115 651 2,184 606 2,790 22.5 652 29.8 1,532
1HFY2012 11,012 6,089 55.3 574 5.2 1,284 11.7 1,672 15.2 9,618 1,394 12.7 1 113 319 1,599 103 1,702 15.5 386 24.1 1,213
% chg 12.7 9.0 15.7 23.7 11.1 11.7 19.0 72 1,973.2 1.8 104.3 36.6 63.9 68.9 26.3
10
10
9 7
Top-line (LHS)
(10.0)
PAT (LHS)
OPM
Gross margin
2QFY2013 3,176 1,745 720 366 288 0 6,295 454 423 103 9 21 1,009 0 0 1,009 14.3 24.2 14.3 2.5 7.1
2QFY2012 2,596 1,556 654 332 264 260 5,663 321 394 88 16 16 836 (1) 56 891 12.4 25.3 13.4 5.0 6.1
% chg 22.3 12.1 10.0 10.2 9.2 11.2 41.2 7.3 17.5 (45) 26.4 21
1QFY2013 3,163 1,847 654 437 264 260 6,625 385 476 95 25 (4) 976 (5) 756
%chg 0.4 (5.6) 10.0 (16.2) 9.2 (5.0) 17.7 (11.2) 8.5 (64) (576.7) 3
1HFY2013 6,339 3,592 1,374 803 552 0 12,660 839 898 198 26 (2) 1,958 (12) 843
1HFY2012 5,154 3,138 1,263 705 930 0 11,190 557 807 163 34 37 1,599 (1) 104 1,702 10.8 25.7 12.9 4.8 4.0
% chg 23.0 14.4 8.7 14.0 (40.6) 13.1 50.5 11.3 21.4 (24.1) 22.5
13.2
(41.6)
63.9
169
166
Top-line (LHS)
EBIT (LHS)
EBIT % (RHS)
320
(%)
Top-line (LHS)
EBIT (LHS)
EBIT % (RHS)
Investment arguments
Increasing innovation and brand repositioning to accelerate growth: HUL has been very actively re-launching products from its existing brands and has increased the pace of new launches, targeting the mid/premium market segment. This, in our view, is positive, considering that the company will have a better control on pricing. Moreover, constant innovations have helped HUL stabilize its market share losses. However, we believe ITCs commitment to categories such as soaps, shampoos and skin care, may pose a major threat to HUL in the long run. Healthy domestic growth rates and strong balance sheet provide further impetus: HUL, with its iconic brands, has maintained its growth, which is impressive given the recent price hikes across categories and a strong competitive scenario, indicating a revival in consumer demand and higher growth in the mid/premium market segment. Moreover, HUL is a cash-rich, zero-debt company enjoying a high RoE of ~75%.
20x
25x
30x
35x
Source: Company, Angel Research, Note: Blue line indicates 5-year average
Company Background
HUL, a 52% subsidiary of Unilever, is one of India's largest consumer goods companies. HUL is present across four main product categories 1) soaps and detergents (50% of revenue); 2) personal products (mainly shampoos, skin care and toothpaste; 30% of revenue); 3) beverages (mainly tea and coffee; 12% of revenue); 4) packaged foods and ice cream (6% of revenue); and 5) others, mainly consisting of water purifiers. The company, with its iconic brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's, Vaseline, Lakm, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan and Walls, has a vast presence in rural as well as urban Indian markets, with one of the largest distribution networks spanning over 6.3mn retail outlets.
FY2009# FY2010 FY2011 FY2012 FY2013E FY2014E 20,239 17,524 20,239 17,524 48.0 10,810 2,131 1,152 3,490 2,656 41.4 13.1 195 2,461 41.4 12.2 25 590 19.5 3,025 40.9 4 3,021 524 17.3 2,501 2,501 2,496 29.7 12.3 11.5 11.5 43.3 (13.4) 8,878 2,391 936 2,770 2,548 (4.1) 14.5 184 2,364 (3.9) 13.5 7 350 12.9 2,707 (10.5) (99) 2,806 604 22.3 2,103 2,103 2,202 (11.8) 12.6 9.6 9.6 (16.0) 17,583 14,975 19,401 19,401 10.7 17,036 10,057 2,764 961 3,254 2,365 (7.2) 12.2 221 2,144 (9.3) 11.1 0 586 21.5 2,730 0.9 (207) 2,937 631 23.1 2,099 2,099 2,306 4.7 11.9 9.7 9.7 0.9 21,736 21,736 12.0 18,825 11,738 2,635 1,107 3,345 2,911 23.1 13.4 218 2,692 25.6 12.4 1 659 19.7 3,350 22.7 (119) 3,469 778 23.2 2,573 2,573 2,691 16.7 12.4 11.9 11.9 22.4 25,350 25,350 16.6 21,972 13,586 3,219 1,280 3,886 3,379 16.1 13.3 224 3,155 17.2 12.4 23 1,016 24.5 4,148 23.8 (466) 4,614 963 23.2 3,185 3,185 3,651 35.7 14.4 14.7 14.7 23.8 28,974 28,974 14.3 25,054 15,499 3,651 1,463 4,442 3,919 16.0 13.5 226 3,693 17.1 12.7 23 1,129 23.5 4,799 15.7 4,799 1,114 23.2 3,685 3,685 3,685 0.9 12.7 17.0 17.0 15.7
Note: FY2009 results are for 15 months; Some of the figures from FY2011 onwards are
FY2009# FY2010 218 1,844 2,062 422 (255) 218 2,365 2,584 (249)
FY2011 FY2012E FY2013E FY2014E 216 2,444 2,660 (210) 664 219 216 3,297 3,513 (214) 667 330 4,295 3,812 1,664 2,147 215 2,438 396 5,547 1,830 521 3,196 6,449 (902) 4,295 216 3,809 4,025 (210) 700 330 4,845 3,992 1,888 2,104 399 2,438 420 6,900 2,503 594 3,803 7,417 (517) 4,845 216 5,484 5,701 (210) 700 330 6,521 4,110 2,114 1,996 411 3,138 450 8,008 2,850 709 4,450 7,483 525 6,521
2,229 2,882 1,275 1,607 472 333 5,601 1,777 758 3,066 5,784 2,229
2,335 3,582 1,420 2,162 274 1,264 5,368 1,892 624 2,852 6,733 2,335
3,333 3,760 1,591 2,169 289 1,261 400 5,834 1,628 452 3,754 6,620 (786) 3,333
(183) (1,365)
Note: FY2009 results are for 15 months; Some of the figures from FY2011 onwards are
FY2009# FY2010 FY2011 FY2012 FY2013E FY2014E 3,025 195 (330) (126) 524 (19) 2,220 (629) 1,167 39 333 1,677 (122) 1,576 201 1,777 2,707 184 1,375 (117) 604 (67) 3,477 (502) (931) 32 (422) 1,656 (117) 115 1,777 1,892 2,730 221 (538) (190) 631 (142) 1,450 (192) 3 (73) 1,642 (190) (264) 1,892 1,628 3,350 218 205 (161) 778 208 3,043 21 (1,178) 38.1 1,884 (161) 201 1,628 1,830 4,148 224 151 (158) 963 617 4,019 (364) 0 (364) 3,140 (158) (2,981) 673 1,830 2,503 4,799 226 (732) (211) 1,114 6 2,975 (129) (700) (829) 2,009 (211) (1,799) 347 2,503 2,850
538 (1,434)
(189) (1,156)
Note: FY2009 results are for 15 months; Some of the figures from FY2011 onwards are
10
Key Ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value Returns (%) ROCE (Pre-tax) Angel ROIC (Pre-tax) ROE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) WC cycle (ex-cash) (days)
#
FY2009# FY2010 47.7 43.8 57.3 1.4 5.8 44.2 52.7 11.5 11.6 12.5 7.5 9.5 138.9 142.9 7.0 46 10 77 (35) 54.1 51.6 45.7 1.2 6.6 45.5 49.7 9.6 9.7 10.6 6.5 12.0 103.6 90.5 4.9 45 14 110 (68)
FY2011 51.1 50.9 44.4 1.2 6.0 49.0 43.4 9.7 9.7 10.7 6.5 12.3 85.7 80.1 5.2 53 18 105 (50)
FY2012 FY2013E FY2014E 43.9 42.3 33.6 1.4 5.3 39.3 31.6 11.9 11.9 12.9 7.5 16.3 85.5 83.4 5.7 42 11 87 (50) 37.1 34.6 29.3 2.3 4.5 33.7 27.5 14.7 14.7 15.8 12.5 18.6 81.2 84.5 6.4 46 9 81 (48) 32.0 30.2 20.7 1.5 3.9 28.8 19.4 17.0 17.0 18.1 8.0 26.4 74.1 75.8 7.1 46 10 78 (32)
Note: FY2009 results are for 15 months; Some of the figures from FY2011 onwards are
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E-mail: research@angelbroking.com
Website: www.angelbroking.com
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Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered
HUL No No No No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Returns):
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