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
|(Rs m)||Q1 FY13||Q1 FY12||% yoy||Q4 FY12||% qoq|
|OPM (%)||13.4||12.0||137 bps||12.9||54 bps|
|Eff. tax rate (%)||35.3||24.1||-||22.2||-|
|Adj. PAT margin (%)||11.6||10.3||128 bps||11.6||(1) bps|
|Extra ordinary items||6,047||588||929.3||281||-|
|Ann. EPS (Rs)||13.4||10.5||27.8||12.2||10.3|
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).
|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|
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
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