Hindustan Unilever (Q1 FY13)

India Infoline News Service | Mumbai |

We maintain Market Performer rating with a revised 9-mth target price of Rs453

CMP Rs443, Target Rs453, Upside 2.4%
  • Q1 revenues matched our expectations by recording 13.7% yoy growth at ~Rs63bn, driven by strong ~21% yoy growth in HPC segment. Domestic FMCG business witnessed a healthy underlying volume growth of 9% 
  • Soaps and Detergents segment witnessed 290bps expansion in EBIT margins at 12.2% on a low base. Personal products segment margins, however, declined 20bps to 25.8%
  • Operating margins expanded by 140bps to 13.4% aided by 220bps reduction in raw material cost. Net profit registered 27.8% yoy increase at Rs7.3bn driven by strong topline growth and improved operating efficiency. Adjusted net profit more than doubled to Rs13.3bn due to an extraordinary income of ~Rs6bn from sale of prime real estate in Mumbai and Bangalore.
  • We maintain Market Performer rating with a revised 9-mth target price of Rs453
Result table
(Rs m) Q1 FY13 Q1 FY12 % yoy Q4 FY12 % qoq
Net sales 62,502 54,959 13.7 56,605 10.4
Material cost (33,677) (30,798) 9.4 (31,223) 7.9
Personnel cost (3,329) (2,862) 16.3 (2,751) 21.0
Advertising cost (8,196) (6,330) 29.5 (6,773) 21.0
Other overheads (8,921) (8,356) 6.8 (8,578) 4.0
Operating profit 8,378 6,613 26.7 7,280 15.1
OPM (%) 13.4 12.0 137 bps 12.9 54 bps
Depreciation (576) (562) 2.5 (571) 1.0
Interest (53) (0) - (2) -
Other income 3,472 1,436 141.9 1,754 98.0
PBT 11,222 7,486 49.9 8,461 32.6
Tax (3,957) (1,802) 119.5 (1,876) 111.0
Eff. tax rate (%) 35.3 24.1 - 22.2 -
Adjusted PAT 7,265 5,684 27.8 6,585 10.3
Adj. PAT margin (%) 11.6 10.3 128 bps 11.6 (1) bps
Extra ordinary items 6,047 588 929.3 281 -
Reported PAT 13,312 6,272 112.3 6,866 93.9
Ann. EPS (Rs) 13.4 10.5 27.8 12.2 10.3
Source: Company, India Infoline Research

Revenues in line with expectations
HUL Q1 FY13 revenues were in line with our expecations at Rs62.5bn – up 13.7% yoy, driven by 18.7% yoy growth in domestic FMCG business. Domestic FMCG business witnessed a strong underlying volume growth of 9% (10% in Q4 FY12).

Revenue break-up

Q1 FY13 Q1 FY12 Growth Q4 FY12 Growth
(Rs mn) (3) (3) % yoy (3) % qoq
Domestic FMCG - HPC 49,256 40,832 20.6 44,802 9.9
Domestic FMCG - Foods 10,700 9,671 10.6 10,144 5.5
a) Domestic FMCG - Total 59,956 50,503 18.7 54,946 9.1
B) Others 2,545 4,456 (42.9) 1,659 53.4
Total (a+b) 62,502 54,959 13.7 56,605 10.4
Source: Company, India Infoline Research

The core Soaps and Detergents segment; contributing ~50% to revenues and ~40% to EBIT, outperformed the industry by registering 23.7% yoy growth at Rs31.6bn (strong double digit growth across all brands – double digit volume growth in Surf and Rin). Personal products segment recorded 16.7% yoy growth in revenues at Rs18.5bn primarily led by strong growth in skin care segment (double digit growth in all the key brands - Fair and Lovely, Ponds, Lakme). The growth could have been better but for the slower growth in toothpaste and shampoo segments due to intense competition. Beverages segment registered mere 7.4% yoy growth in revenues impacted by poor performance of mass segment tea brands. Revenues from the packaged foods segment witnessed 17.3% yoy increase at Rs4.4bn driven by Kissan and Kwality Walls (slower growth in Knorr impacted by slowdown in market).

Segment-wise revenue trend
Segments FY11 FY12 FY13
(Rs m) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Soaps & Det. 22,645 21,294 21,929 22,075 25,576 25,926 26,481 28,344 31,631
Personal Prod. 13,655 13,649 16,547 14,609 15,823 16,126 18,877 17,109 18,471
Beverages 5,378 5,700 6,022 6,347 6,092 6,533 6,709 6,832 6,541
Pkged Foods 3,158 2,744 2,700 3,174 3,725 3,318 3,067 3,481 4,370
Others 3,774 4,174 4,020 3,414 4,634 4,070 4,361 1,823
BSE 1,325.15 1.50 (0.11%)
NSE 1,324.55 2.95 (0.22%)

***Note: This is a NSE Chart

 

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