-
RESULTS REVIEW 4QFY19 04 MAY 2019
Hindustan Unilever NEUTRAL
HDFC securities Institutional Research is also available on
Bloomberg HSLB & Thomson Reuters
Maintains growth leadership HUL reported a healthy quarter
(in-line) in the context of challenging macros. Notwithstanding its
scale, HUL maintained growth leadership over the last 6 quarters
(10% volume growth) led by strong product portfolio and remarkable
execution. We continue to maintain our NEUTRAL rating since we
downgraded in Jul-18 (stock is flat since then) as we don’t see any
near-term trigger. We value HUL at 45x on FY21 EPS arriving at a TP
of Rs 1,804. HIGHLIGHTS OF THE QUARTER Domestic revenue/volume grew
at 9/7% (12/10% in
FY19) vs. our exp of 10/7.5%. The sector growth has moderated
owing to tapering of rural growth (Currently 1x vs. urban growth as
compared to 1.2-1.3x in CY18). We believe the slowdown in rural
demand is momentary as (a) Trade channel is normalizing inventory
to factor weaker than expected liquidity prior to elections (unlike
previous elections) and (b) Govt. will focus on healing rural
stress (farm incomes). HUL maintains positive outlook in the medium
term.
Home Care maintained healthy performance at +13/22% Rev./EBIT
growth. Laundry growth is driven by its premium portfolio and WiMi
strategy. Beauty & PC (BPC) growth (+7/14% Rev./EBIT growth)
was impacted by cleansing products (particularly Lux and
Lifebuoy, >20% combined revenue mix in BPC), ex-cleansing the
segment grew in double digits. HUL will go back to the drawing
board to fix slowdown in these brands (price action). F&R
growth (+9/21% Rev./EBIT growth) was driven by Red Label campaigns
and innovations in Ice cream & frozen desserts.
GM declined by 27bps owing to limited price hikes. Cost savings
program, premiumisation and operating leverage drove EBITDAM
(+83bps vs. exp. of 110bps) to 23.3% (30 qtrs of expansion in the
last 31qtrs). We model EBITDAM expansion of 90bps (vs. 350bps over
FY17-19) over FY19-21E as we believe there will be moderation in
cost savings drive.
STANCE In 2017, our upgrade on HUL was led by the rationale that
the company will outperform its peers during a challenging
environment. After a 70% run-up in the stock (post our upgrade), we
downgraded HUL as we believed that the stock priced in all the near
term positives and hence everything had to go right (which didn’t).
We maintain our NEUTRAL rating, which may change with (a) Further
time correction in the stock, (b) Recovery in rural demand and (c)
Successful integration of GSK portfolio (ability to surprise on
margin expansion).
Financial Summary YE March (Rs mn) 4QFY19 4QFY18 YoY (%) 3QFY19
QoQ (%) FY17 FY18 FY19P FY20E FY21E Net Revenues 99,450 90,970 9.3
95,580 4.0 331,620 355,450 393,100 452,117 552,064 EBITDA 23,210
20,480 13.3 20,460 13.4 63,400 74,990 88,808 105,104 133,778 APAT
15,900 14,090 12.8 14,010 13.5 19,770 20,790 25,440 31,527 39,919
Diluted EPS (Rs) 7.3 6.5 12.8 6.5 13.5 19.7 23.8 27.7 33.4 40.7 P/E
(x) 86.1 71.2 61.2 50.8 41.6 EV / EBITDA (x) 56.9 47.9 40.4 36.9
28.8 Core RoCE (%) 53.6 64.0 67.6 28.4 21.9
Source: Company, HDFC sec Inst Research
INDUSTRY FMCG CMP (as on 03 May 2019) Rs 1,693 Target Price Rs
1,804 Nifty 11,712 Sensex 38,963 KEY STOCK DATA Bloomberg HUVR IN
No. of Shares (mn) 2,165 MCap (Rs bn) / ($ mn) 3,664/52,873 6m avg
traded value (Rs mn) 2,820 STOCK PERFORMANCE (%) 52 Week high / low
Rs 1,871/1,442 3M 6M 12M Absolute (%) (5.9) 3.3 16.6 Relative (%)
(12.8) (8.0) 5.6 SHAREHOLDING PATTERN (%) Dec-18 Mar-19 Promoters
67.19 67.19 FIs & Local MFs 7.44 7.03 FPIs 19.40 18.86 Public
& Others 1.45 2.12 Pledged Shares 0.00 0.00 Source : BSE
Naveen Trivedi [email protected] +91-22-6171-7324
Siddhant Chhabria [email protected]
+91-22-6171-7336
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HUL: RESULTS REVIEW 4QFY19
Page | 2
Quarterly Financials (Standalone) Particulars (Rs mn) 4QFY19
4QFY18 YoY (%) 3QFY19 QoQ (%) FY19 FY18 YoY (%) Net Sales 98,090
90,030 9.0 93,570 4.8 376,600 339,260 11.9 Other Operating Income
1,360 940 44.7 2,010 (32.3) 5,640 5,990 (5.8) Total Income 99,450
90,970 9.3 95,580 4.0 382,240 345,250 10.7 Material Expenses 47,430
43,140 9.9 44,180 7.4 179,600 162,320 10.6 Employee Expenses 4,020
4,000 0.5 4,650 (13.5) 17,470 17,450 0.1 ASP 11,070 10,700 3.5
11,860 (6.7) 45,520 41,050 10.9 Other Operating Expenses 13,720
12,650 8.5 14,430 (4.9) 53,280 51,670 3.1 EBITDA 23,210 20,480 13.3
20,460 13.4 86,370 72,760 18.7 Depreciation 1,340 1,280 4.7 1,326
1.1 5,236 4,780 9.5 EBIT 21,870 19,200 13.9 19,134 14.3 81,134
67,980 19.3 Other Income 1,180 1,000 18.0 1,060 11.3 6,640 5,690
16.7 Interest Cost 70 40 75.0 70 - 280 215 30.2 PBT 22,980 20,160
14.0 20,124 14.2 87,494 73,455 19.1 Exceptional (710) (640) na
(620) na (2,270) (620) na PBT (after exceptional) 22,270 19,520
14.1 19,504 14.2 85,224 72,835 17.0 Tax 6,890 6,010 14.6 5,060 36.2
25,650 22,100 16.1 RPAT 15,380 13,510 13.8 14,444 6.5 60,364 52,355
15.3 APAT 15,900 14,090 12.8 14,010 13.5 60,800 51,350 18.4 EPS
(Adjusted) 7.3 6.5 12.8 6.5 13.5 28.1 23.7 18.4 As % Of Net Revenue
4QFY19 4QFY18 YoY (bps) 3QFY19 QoQ (bps) FY19 FY18 YoY (bps)
Material Expenses 47.7 47.4 27 46.2 147 47.0 47.0 (3) Employee
Expenses 4.0 4.4 (35) 4.9 (82) 4.6 5.1 (48) ASP Expenses 11.1 11.8
(63) 12.4 (128) 11.9 11.9 2 Other Operating Expenses 13.8 13.9 (11)
15.1 (130) 13.9 15.0 (103) EBITDA Margin (%) 23.3 22.5 83 21.4 193
22.6 21.1 130 Tax Rate (%) 30.9 30.8 15 25.9 500 30.1 30.3 (25)
APAT Margin (%) 16.0 15.5 50 14.7 133 15.9 14.9 103 Source:
Company, HDFC sec Inst Research Note: *Like-like (GST impact)
9% revenue growth was driven by 7% volume growth Stringent cost
control led to employee/ASP/other expenses growing by 0.5/3.5/8.5%.
Gross margins declined by 27bps owing to delay in price hike
EBITDAM expansion was driven by richer mix and cost savings
Exceptional item was due to deferred consideration payable on
account of Indulekha acquisition (growth was higher than expected
by management)
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HUL: RESULTS REVIEW 4QFY19
Page | 3
Quarterly Segmental (Standalone) Year to March (Rs mn) 4QFY19
4QFY18 YoY (%) 3QFY19 QoQ (%) FY19 FY18 YoY (%) Segmental Revenues
Home Care 35,020 31,020 12.9 31,480 11.2 128,760 116,290 15.0
Beauty & PC 43,930 40,960 7.3 45,390 (3.2) 176,550 164,640 10.7
Foods & Refreshment 19,160 17,350 10.4 17,280 10.9 71,330
64,410 11.5 Others 1,340 1,640 (18.3) 1,430 (6.3) 5,600 6,230 (6.0)
Total 99,450 90,970 9.3 95,580 4.0 382,240 351,570 12.0 Segmental
EBIT Home Care 6,190 5,090 21.6 4,040 53.2 21,170 16,940 25.0
Beauty & PC 12,200 10,660 14.4 11,620 5.0 46,590 41,000 13.6
Foods & Refreshment 3,460 2,870 20.6 2,440 41.8 12,120 9,850
23.0 Others 20 20 - (30) (166.7) (10) (120) (91.7) Total 21,870
18,640 17.3 18,070 21.0 79,870 67,670 18.0 (a) Interest Cost &
Bank Charges 70 40 75.0 70 - 280 210 33.3 (b) Other Un-allocable
Expenses 20 20 - (30) (166.7) (6,340) (5,380) 17.8 PBT 22,980
19,520 17.7 19,500 17.8 85,930 72,840 18.0 Capital Employed Home
Care (4,820) (7,650) na (10,300) na (4,820) (7,650) na Beauty &
PC (2,200) 13 na (6,080) na (2,200) 13 na Foods & Refreshment
8,680 6,020 44.2 6,250 38.9 8,680 6,020 44.2 Others 770 640 20.3
520 48.1 770 640 20.3 Total 2,430 (977) na (9,610) na 2,430 (977)
(348.7) Unallocable Capital Employed 74,160 71,610 3.6 70,850 4.7
74,160 71,610 3.6 Total Capital Employed 76,590 70,633 8.4 61,240
25.1 76,590 70,633 8.4 Source: Company, HDFC sec Inst Research EBIT
Margin EBIT Margin 4QFY19 4QFY18 YoY (bps) 3QFY19 QoQ (bps) FY19
FY18 YoY (bps) Home Care 17.7 16.4 127 12.8 484 16.4 14.6 187
Beauty & PC 27.8 26.0 175 25.6 217 26.4 24.9 149 Foods &
Refreshment 18.1 16.5 152 14.1 394 17.0 15.3 170 Others 1.5 1.2 na
(2.1) na (0.2) (1.9) na Total 22.0 20.5 150 18.9 309 20.9 19.2 165
Source: Company, HDFC sec Inst Research
Home care growth was driven by double digit volume growth HUL
increased penetration of dish wash bars in rural markets while
focused on upgrading urban consumers to liquids Home Care EBIT
margins expanded by 127bps owing to premiumisation Beauty & PC
growth was slight slow owing to continued challenges in oral care
and softer growth for soaps (Lux & Lifebuoy) F&R continue
healthy performance both on revenue and margin
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HUL: RESULTS REVIEW 4QFY19
Page | 4
Net Revenue Growth Underlying Volume Growth
Source: Company, HDFC sec Inst Research Source: Company, HDFC
sec Inst Research EBITDA APAT
Source: Company, HDFC sec Inst Research Source: Company, HDFC
sec Inst Research
HUL’s revenue growth in the last 2 quarters has been primarily
driven by volume growth EBITDAM expansion is driven by
premiumisation and cost savings
4 4 1
(1)
6 5
10
17 16 16
11 11 9
(3)
-
3
6
9
12
15
18
Q4F
Y16
Q1F
Y17
Q2F
Y17
Q3F
Y17
Q4F
Y17
Q1F
Y18
Q2F
Y18
Q3F
Y18
Q4F
Y18
Q1F
Y19
Q2F
Y19
Q3F
Y19
Q4F
Y19
%
4 4
-1
-4
4
0
4
11 1112
10 10
7
-6-4-202468
101214
Q4F
Y16
Q1F
Y17
Q2F
Y17
Q3F
Y17
Q4F
Y17
Q1F
Y18
Q2F
Y18
Q3F
Y18
Q4F
Y18
Q1F
Y19
Q2F
Y19
Q3F
Y19
Q4F
Y19
%
10.0
13.0
16.0
19.0
22.0
25.0
-
4,000
8,000
12,000
16,000
20,000
24,000
28,000
Q4F
Y16
Q1F
Y17
Q2F
Y17
Q3F
Y17
Q4F
Y17
Q1F
Y18
Q2F
Y18
Q3F
Y18
Q4F
Y18
Q1F
Y19
Q2F
Y19
Q3F
Y19
Q4F
Y19
EBITDA EBITDA Margin (%) - RHS
%Rs mn
8.0
10.0
12.0
14.0
16.0
18.0
6,000
8,000
10,000
12,000
14,000
16,000
Q4F
Y16
Q1F
Y17
Q2F
Y17
Q3F
Y17
Q4F
Y17
Q1F
Y18
Q2F
Y18
Q3F
Y18
Q4F
Y18
Q1F
Y19
Q2F
Y19
Q3F
Y19
Q4F
Y19
APAT NPM (%) - RHS%Rs mn
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HUL: RESULTS REVIEW 4QFY19
Page | 5
A&P Personal Care Performance
Source: Company, HDFC sec Inst Research Source: Company, HDFC
sec Inst Research Home Care Performance Foods & Refreshment
Performance
Source: Company, HDFC sec Inst Research Source: Company, HDFC
sec Inst Research
HUL has rationalised A&P spends in the last 2 quarters
(growing slower than volume growth) GST led price-cuts (>800
SKUs benefited) are aiding in driving growth for premium products
Only 1 in 10 washes arise from premium detergent providing
significant scope for premiumisation
10.00
11.00
12.00
13.00
14.00
6,000
7,000
8,000
9,000
10,000
11,000
12,000
Q4F
Y16
Q1F
Y17
Q2F
Y17
Q3F
Y17
Q4F
Y17
Q1F
Y18
Q2F
Y18
Q3F
Y18
Q4F
Y18
Q1F
Y19
Q2F
Y19
Q3F
Y19
Q4F
Y19
A&P A&P (%) of sales - RHS
%Rs mn
20.0
22.0
24.0
26.0
28.0
30.0
34,000
36,000
38,000
40,000
42,000
44,000
46,000
Q4F
Y16
Q1F
Y17
Q2F
Y17
Q3F
Y17
Q4F
Y17
Q1F
Y18
Q2F
Y18
Q3F
Y18
Q4F
Y18
Q1F
Y19
Q2F
Y19
Q3F
Y19
Q4F
Y19
Revenue EBIT Margin - RHS
%Rs mn
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
20,500
22,500
24,500
26,500
28,500
30,500
32,500
34,500
36,500
Q4F
Y16
Q1F
Y17
Q2F
Y17
Q3F
Y17
Q4F
Y17
Q1F
Y18
Q2F
Y18
Q3F
Y18
Q4F
Y18
Q1F
Y19
Q2F
Y19
Q3F
Y19
Q4F
Y19
Revenue EBIT Margin - RHS
%Rs mn
-
4.0
8.0
12.0
16.0
20.0
8,000
10,000
12,000
14,000
16,000
18,000
Q4F
Y16
Q1F
Y17
Q2F
Y17
Q3F
Y17
Q4F
Y17
Q1F
Y18
Q2F
Y18
Q3F
Y18
Q4F
Y18
Q1F
Y19
Q2F
Y19
Q3F
Y19
Q4F
Y19
Revenue EBIT Margin - RHS%Rs mn
-
HUL: RESULTS REVIEW 4QFY19
Page | 6
Personal Care Performance Particulars (Rs mn) Sep-16 Dec-16
Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19
Revenue 40,280 39,802 40,750 43,680 39,100 40,900 40,960 44,070
43,160 45,390 43,930 YoY Gr. (%) -0.3% -2.7% 8.1% 3.5% 8.0% 20.0%
13.0% 14.0% 10.4% 11.0% 7.3% Revenue Mix (%) 47.6% 47.9% 45.9%
47.4% 47.1% 47.6% 45.0% 46.5% 46.7% 47.5% 44.2% EBIT 9,226 9,208
9,840 10,790 9,480 10,070 10,660 11,620 11,150 11,620 12,200 YoY
Gr. (%) 3.6% -7.1% 9.0% 5.7% 2.8% 9.4% 8.3% 7.7% 17.6% 15.4% 14.4%
EBIT Margin (%) 22.9% 23.1% 24.1% 24.7% 24.2% 24.6% 26.0% 26.4%
25.8% 25.6% 27.8% EBIT Mix (%) 66.0% 68.9% 60.9% 59.4% 60.9% 65.8%
57.2% 55.4% 58.8% 64.3% 55.8% Note: Like-to-like revenue growth for
2QFY18-1QFY19
Home Care Performance Particulars (Rs mn) Sep-16 Dec-16 Mar-17
Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Revenue
27,770 26,891 30,040 30,470 27,390 27,410 31,020 31,460 30,800
31,480 35,020 YoY Gr. (%) 3.2% 1.0% 7.4% 5.9% 13.0% 17.0% 21.0%
20.0% 12.4% 14.8% 12.9% Revenue Mix (%) 32.8% 32.4% 33.8% 33.1%
33.0% 31.9% 34.1% 33.2% 33.4% 32.9% 35.2% EBIT 2,800 2,342 3,890
4,480 3,830 3,540 5,090 6,020 4,920 4,040 6,190 YoY Gr. (%) 24.7%
-0.6% 28.8% 25.8% 36.8% 51.1% 30.8% 34.4% 28.5% 14.1% 21.6% EBIT
Margin (%) 10.1% 8.7% 12.9% 14.7% 14.0% 12.9% 16.4% 19.1% 16.0%
12.8% 17.7% EBIT Mix (%) 20.0% 17.5% 24.1% 24.7% 24.6% 23.1% 27.3%
28.7% 25.9% 22.4% 28.3% Note: Like-to-like revenue growth for
2QFY18-1QFY19
Foods & Refreshment Performance Particulars (Rs mn) Sep-16
Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18
Mar-19 Revenue 14,470 14,426 15,950 16,540 15,260 15,720 17,350
17,850 17,040 17,280 19,160 YoY Gr. (%) 5.4% 4.3% 6.5% 12.0% 10.5%
15.5% 12.0% 14.0% 11.7% 9.9% 10.4% Revenue Mix (%) 17.1% 17.4%
18.0% 18.0% 18.4% 18.3% 19.1% 18.8% 18.5% 18.1% 19.3% EBIT 1,863
1,974 2,470 2,950 2,310 1,720 2,870 3,340 2,880 2,440 3,460 YoY Gr.
(%) 14.1% 1.5% 6.3% 41.1% 24.0% -12.9% 16.2% 13.2% 24.7% 41.9%
20.6% EBIT Margin (%) 12.9% 13.7% 15.5% 17.8% 15.1% 10.9% 16.5%
18.7% 16.9% 14.1% 18.1% EBIT Mix (%) 13.3% 14.8% 15.3% 16.2% 14.8%
11.2% 15.4% 15.9% 15.2% 13.5% 0.0% Note: Like-to-like revenue
growth for 2QFY18-1QFY19 Source: Company, HDFC sec Inst
Research
Premium mix in detergent rises by ~100bps annually for HUL HUL
re-aligned strategy on water purifiers to premium devices (phasing
out gravity segment) Foods & Refreshment growth was driven by
ice-creams, beverages and foods (Kissan and Knorr)
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HUL: RESULTS REVIEW 4QFY19
Page | 7
Assumptions Particulars FY17 FY18 FY19 FY20E FY21E Revenue (Rs
mn) Home Care 113,460 116,260 128,740 144,812 162,891 Beauty &
PC 164,320 165,880 178,000 195,689 215,693 Foods 11,240 11,650
12,543 28,200 79,136 - HUL 11,240 11,650 12,543 14,299 16,303 - GSK
na na na 13,901 62,834 Refreshment 48,480 53,110 58,767 66,334
74,956 Others (export, infant & feminine care) 19,600 15,330
15,050 17,082 19,388 Gross segment revenue 357,100 362,230 393,100
452,117 552,064 YoY Growth Home Care 5% 2% 15% 12% 12% Beauty &
PC 2% 1% 11% 10% 10% Foods 3% 4% 12% 125% 181% - HUL 3% 4% 12% 14%
14% - GSK (underlying growth) na na na 13% 13% Refreshment 8% 10%
12% 13% 13% Others -5% -22% -6% 14% 14% Total 3% 1% 12% 15% 22%
Total (Ex-GSK) 3% 1% 12% 11% 12% EBIT Margin Home Care 11.2% 14.6%
16.7% 16.9% 17.0% Beauty & PC 23.7% 25.3% 26.7% 27.2% 27.6%
Foods 7.7% 8.5% 10.0% 19.2% 26.8% - HUL 7.7% 8.5% 10.0% 11.0% 12.0%
- GSK na na na 27.5% 30.6% Refreshment 15.7% 16.9% 18.8% 19.5%
20.0% Others 10.2% 9.5% 11.8% 12.5% 13.5% Total 17.4% 19.5% 21.2%
21.7% 22.8% Gross Margin (%) 50.8 52.9 53.0 54.2 57.4 Employee (%
of sales) 5.3 5.2 4.8 4.6 4.5 ASP (% of sales) 10.7 11.7 11.7 11.8
12.0 Distribution (% of sales) 4.6 4.4 4.1 4.1 4.1 Other Expenses
(% of sales) 11.2 10.6 9.8 10.4 12.6 EBITDA Margin (%) 19.1 21.1
22.6 23.2 24.2 Tax Rate (%) 30.5 28.5 29.6 30.0 29.5 Source:
Company, HDFC sec Inst Research | Note: FY18 revenue growth is
like-like
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HUL: RESULTS REVIEW 4QFY19
Page | 8
Change in Estimates
FY19E FY20E FY21E
OLD NEW Chg (%) OLD NEW Chg (%) OLD NEW Chg (%) Net Sales
398,562 393,100 -1.4% 460,187 452,117 -1.8% 563,958 552,064 -2.1%
EBITDA 89,539 88,808 -0.8% 106,539 105,104 -1.3% 136,739 133,778
-2.2% APAT 61,298 60,800 -0.8% 74,587 73,586 -1.3% 97,592 95,426
-2.2% EPS 28.4 28.1 -0.8% 33.8 33.4 -1.3% 41.6 40.7 -2.2% Source:
HDFC sec Inst Research Peer Set Comparison
Companies MCap
(Rs bn)
CMP (Rs) Reco.
TP (Rs)
EPS (Rs) P/E (x) EV/EBITDA (x) Core RoCE (%)
FY19E FY20E FY21E FY19E FY20E FY21E FY19E FY20E FY21E FY19E
FY20E FY21E
ITC 3,728 306 BUY 394 10.2 11.3 12.4 29.9 27.1 24.6 18.8 16.9
15.1 38.1 38.6 40.1 HUL 3,664 1,693 NEU 1,804 28.1 33.4 40.7 60.2
50.8 41.6 40.4 36.9 28.8 68.3 28.3 21.9 Nestle 1,008 10,454 NR
11,225 176.3 210.5 249.4 59.3 49.7 41.9 34.5 29.5 25.3 78.0 100.1
136.7 Dabur 669 380 BUY 464 8.2 10.2 12.2 46.4 37.1 31.1 37.0 30.4
25.6 47.5 55.4 61.6 Britannia 647 2,696 NEU 3,101 48.1 56.6 68.9
56.1 47.7 39.1 36.6 30.3 24.9 39.2 41.4 46.1 Marico 459 355 BUY 402
7.2 9.7 11.5 49.0 36.6 30.9 35.3 26.8 23.0 41.4 53.3 60.0 Colgate
319 1,171 NEU 1,260 27.8 32.2 37.3 42.1 36.3 31.4 25.0 21.6 18.7
68.7 77.9 89.1 Emami 178 383 BUY 534 11.7 14.4 16.9 32.8 26.6 22.7
22.6 18.7 16.1 23.6 30.9 37.8 Jub. Food 175 1,326 BUY 1,758 25.1
31.5 38.2 52.8 42.1 34.7 27.5 21.9 18.0 48.9 64.5 85.2 Source: HDFC
sec Inst Research
We cut our estimates to factor in slower than expected pickup in
the rural demand
-
HUL: RESULTS REVIEW 4QFY19
Page | 9
Income Statement (Rs mn) FY17 FY18 FY19 FY20E FY21E Net Revenues
331,620 355,450 393,100 452,117 552,064 Growth (%) 3.0 12.0 12.0
15.0 22.1 Material Expenses 163,130 167,300 184,740 207,070 235,179
Employee Expense 17,430 18,600 18,742 20,991 24,770 ASP Expense
35,420 41,530 46,070 53,350 66,248 Distribution Expenses 15,160
15,470 16,117 18,537 22,635 Other expenses 37,080 37,560 38,623
47,065 69,454 EBITDA 63,400 74,990 88,808 105,104 133,778 EBITDA
Growth (%) 5.4 18.3 18.4 18.4 27.3 EBITDA Margin 19.1 21.1 22.6
23.2 24.2 Depreciation 4,320 5,200 5,650 6,099 7,436 EBIT 59,080
69,790 83,158 99,005 126,342 Other Income (Inc. EO Items) 6,060
3,510 3,220 6,083 8,976 Interest 350 260 330 - - PBT 64,790 73,040
86,048 105,089 135,318 Tax 19,770 20,790 25,440 31,527 39,919 RPAT
44,900 52,270 60,630 73,586 95,426 adjustment (2,420) (920) 818 - -
APAT 42,480 51,350 60,800 73,586 95,426 APAT Growth (%) 2.0 20.9
18.4 21.0 29.7 Adjusted EPS (Rs) 19.7 23.8 28.1 33.4 40.7 EPS
Growth (%) 2.1 20.9 18.4 18.5 22.0
Source: Company, HDFC sec Inst Research
Balance Sheet (Rs mn) FY17 FY18 FY19P FY20E FY21E SOURCES OF
FUNDS Share Capital - Equity 2,160 2,160 2,160 2,345 2,345 Reserves
65,280 70,650 79,838 409,596 429,392 Total Shareholders Funds
67,440 72,810 81,998 411,941 431,736 Minority Interest 220 200 178
154 127 Long Term Debt - - - - - Short Term Debt 2,770 - - - -
Total Debt 2,770 - - - - Net Deferred Taxes (1,700) (3,020) (3,730)
(3,730) (3,730) Long Term Provisions & Others 7,940 11,160
20,770 22,876 26,126 TOTAL SOURCES OF FUNDS 76,670 81,150 99,216
431,240 454,259 APPLICATION OF FUNDS Net Block 44,190 45,280 45,280
55,481 58,045 CWIP 2,290 4,610 4,060 2,030 1,015 Other Non-current
Assets 2,770 3,500 2,773 3,089 3,441 Total Non-current Assets
49,250 53,390 52,113 60,600 62,501 Goodwill - - - 308,700 308,700
Inventories 25,410 25,130 25,740 29,165 34,307 Debtors 10,850
13,100 18,160 20,886 25,504 Other Current Assets 9,300 14,810
15,819 18,168 22,147 Cash & Equivalents 56,230 63,590 73,064
91,581 119,528 Total Current Assets 101,790 116,630 132,783 159,801
201,486 Creditors 61,860 71,700 72,060 82,879 101,200 Other Current
Liabilities & Provns 12,510 17,170 13,620 14,982 17,228 Total
Current Liabilities 74,370 88,870 85,680 97,860 118,428 Net Current
Assets 27,420 27,760 47,103 61,940 83,058 TOTAL APPLICATION OF
FUNDS 76,670 81,150 99,216 431,240 454,259
Source: Company, HDFC sec Inst Research
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Cash Flow Statement (Rs mn) FY17 FY18 FY19P FY20E FY21E Reported
PBT 62,420 73,370 86,048 105,089 135,318 Non-operating & EO
Items 290 (820) - - - Interest Expenses (2,250) (2,340) 330 - -
Depreciation 4,320 5,200 5,650 6,099 7,436 Working Capital Change
5,660 7,910 468 5,470 9,727 Tax Paid (18,590) (22,680) (25,440)
(31,527) (39,919) OPERATING CASH FLOW ( a ) 51,850 60,640 67,055
85,130 112,563 Capex (14,520) (8,780) (5,100) (5,970) (8,985) Free
Cash Flow (FCF) 37,330 51,860 61,955 79,160 103,578 Investments
(1,420) (5,700) 1,580 (322,000) (5,000) Non-operating Income 4,210
3,800 - - - INVESTING CASH FLOW ( b ) (11,730) (10,680) (3,520)
(327,970) (13,985) Debt Issuance/(Repaid) 4,600 - - - - Interest
Expenses (140) (60) (330) - - FCFE 41,790 51,800 61,625 79,160
103,578 Share Capital Issuance - - - 317,000 - Dividend (35,720)
(38,870) (43,200) (50,760) (63,304) Others (10,880) (10,820)
(8,412) (9,884) (12,326) FINANCING CASH FLOW ( c ) (42,140)
(49,750) (51,942) 256,356 (75,630) NET CASH FLOW (a+b+c) (2,020)
210 11,594 13,517 22,947 EO Items, Others 7,136 (16,360) - - -
Closing Cash & Equivalents 18,280 34,850 45,904 59,421
82,368
Source: Company, HDFC sec Inst Research
Key Ratios FY17 FY18 FY19P FY20E FY21E PROFITABILITY (%) GPM
50.8 52.9 53.0 54.2 57.4 EBITDA Margin 19.1 21.1 22.6 23.2 24.2
EBIT Margin 17.8 19.6 21.2 21.9 22.9 APAT Margin 12.8 14.4 15.5
16.3 17.3 RoE 63.8 73.2 78.5 29.8 22.6 RoIC 168.4 247.3 284.9 38.9
26.9 RoCE 53.6 64.0 68.3 28.3 21.9 EFFICIENCY Tax Rate (%) 30.5
28.5 29.6 30.0 29.5 Fixed Asset Turnover (x) 4.3 4.3 4.4 4.7 5.2
Inventory (days) 28.0 25.8 23.9 23.5 22.7 Debtors (days) 11.9 13.5
16.9 16.9 16.9 Other Current Assets (days) 10.2 15.2 14.7 14.7 14.6
Payables (days) 68.1 73.6 66.9 66.9 66.9 Other Current Liab &
Provns (days) 13.8 17.6 12.6 12.1 11.4 Cash Conversion Cycle (days)
(31.7) (36.8) (24.1) (23.9) (24.1) Net D/E (x) (0.8) (0.9) (0.9)
(0.2) (0.3) PER SHARE DATA (Rs) EPS 19.7 23.8 28.1 33.4 40.7 CEPS
21.7 26.2 30.8 36.0 43.9 Dividend 17.0 20.0 23.5 27.0 30.5 Book
Value 31.2 33.7 38.0 175.7 184.1 VALUATION P/E (x) 86.1 71.2 60.2
50.8 41.6 P/BV (x) 54.2 50.2 44.6 9.6 9.2 EV/EBITDA (x) 56.9 47.9
40.4 36.9 28.8 EV/Revenues (x) 10.9 10.1 9.1 8.6 7.0 OCF/EV (%) 1.4
1.7 1.9 2.2 2.9 FCF/EV (%) 1.0 1.4 1.7 2.0 2.7 FCFE/Mkt Cap (%) 1.1
1.4 1.7 2.0 2.6 Dividend Yield (%) 1.0 1.2 1.4 1.6 1.8
Source: Company, HDFC sec Inst Research
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RECOMMENDATION HISTORY
Rating Definitions BUY : Where the stock is expected to deliver
more than 10% returns over the next 12 month period NEUTRAL : Where
the stock is expected to deliver (-)10% to 10% returns over the
next 12 month period SELL : Where the stock is expected to deliver
less than (-)10% returns over the next 12 month period
Date CMP Reco Target 15-May-18 1,504 BUY 1,615
7-Jun-18 1,571 BUY 1,701 9-Jul-18 1,678 NEU 1,709
16-Jul-18 1,751 NEU 1,709 10-Oct-18 1,514 NEU 1,687 13-Oct-18
1,570 NEU 1,691 4-Dec-18 1,808 NEU 1,855 9-Jan-19 1,771 NEU
1,855
18-Jan-19 1,752 NEU 1,855 10-Apr-19 1,681 NEU 1,844 4-May-19
1,693 NEU 1,804
1,400
1,450
1,500
1,550
1,600
1,650
1,700
1,750
1,800
1,850
1,900
May
-18
Jun-
18
Jul-1
8
Aug-
18
Sep-
18
Oct
-18
Nov-
18
Dec -
18
Jan-
19
Feb-
19
Mar
-19
Apr-
19
May
-19
HUVR TP
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Disclosure: We, Naveen Trivedi, MBA & Siddhant Chhabria,
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HUL: RESULTS REVIEW 4QFY19
Page | 13
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