Please refer to important disclosures at the end of this report 1 ( ` cr) 2QFY12 2QFY11 % yoy Angel Est % Diff Revenue 5,522 4,681 18.0 5,345 3.3 EBITDA738 563 31 672 9.8 OPM (%) 13.4 12.0 134bp 12.6 79bp PAT 645 526 22.6 599 7.5 Source: Company, Angel Research HUL posted a strong set of numbers for the quarter, above our estimates. The company’s top line grew by 18% yoy to `5,522cr ( `4,681cr). Recurring earnings for the quarter grew by 22.6% yoy to `645cr, above our estimates. We remain Neutral on the stock. Key highlights during the quarter: HUL posted impressive top-line growth of 18% yoy, driven by healthy volume growth of 10% yoy. Overall, FMCG sales grew by20% yoy, aided by 20.5% yoy growth in the home and personal care (HPC) business and 17% yoy growth in the foods business. The soaps and detergent (S&D) segment posted 21.8% yoy revenue growth, while its EBIT margin expanded by 65bp yoy to 12.4%. The packaged food business reported 20.9% yoy growth. The personal products segment grew by 18.2% yoy, registering the tenth consecutive quarter of double-digit volume-led growth. At the operating level, OPM expanded by 134bp yoy to 13.4%. During the quarter, HUL reduced its ad spends and other expenses and negated the affect of gross margin pressure. Outlook and valuation: Post 2QFY2012, we maintain our revenue and earnings estimates. We expect HUL to post a ~13% CAGR in its top line over FY2011-13E, largely aided by steady performance of the company’s personal care and foods division (aided by innovations and higher ad spends), spike in detergents volume growth and modest performance of its soaps business (aided by brand re-launches). In terms of earnings, we expect HUL to post a ~17% CAGR. At the CMP of ` 388, the stock is trading at 29.2x FY2013E earnings. We see a limited upside in the stock price from current levels; hence, we maintain our Neutral view on the stock. Key financials Y/E March ( ` cr) FY2010 FY2011 FY2012E FY2013E Net sales 17,524 19,401 21,865 24,637 % chg (13.4) 10.7 12.7 12.7 Net profit (Adj.) 2,103 2,099 2,523 2,877 % chg (15.9) (0.2) 20.2 14.0 OPM (%) 14.5 12.2 13.6 14.0 EPS ( ` ) 9.7 9.7 11.7 13.3 P/E (x) 38.5 36.4 33.3 29.2 P/BV (x) 32.5 31.9 26.8 23.3 RoE (%) 90.5 80.5 87.5 85.3 RoCE (%) 101.3 88.5 93.1 93.6 EV/Sales (x) 4.7 4.2 3.7 3.3 EV/EBITDA (x) 32.0 34.6 27.2 23.3 Source: Company, Angel Research NEUTRAL CMP `388 Target Price -Investment Period - Stock Info Sector Bloomberg Code Shareholding Pattern (%) Promoters 52.5 MF / Banks / Indian Fls 12.1 FII / NRIs / OCBs 17.7 Indian Public / Others 17.7 Abs. (%) 3m 1yr 3yr Sensex ( 4.6) (14.1) 78.6 HUL 20.4 31.9 75.0 HUVR@IN 17,481 5,258 HUL.BO 232,070 BSE Sensex NiftyReuter s C ode Face Value ( `) FMCG Avg. Daily Volume Market Cap ( `cr) Beta 52 Week High / Low 84,748 0.5 1 393/264 Sreekanth P.V.S 022 – 3935 7800 Ext: 6841 [email protected]HUL Performance Highlights HUL | 2QFY2012 Result Update November 1, 2011
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Disclosure of Interest Statement HUL
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No
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Ratings (Returns) : Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to 15%) Sell (< -15%)