2025-11-20 16:58:35
Latest Post
Hester Biosciences Ltd appoints Mr. Ashish Desai as CFO and KMP
WABAG secures ADB funded 'Large' DBO order from Melamchi Water Supply Development Board, Government of Nepal
Brightcom Group Ltd updates on Strategic Partnership with Dailymotion Advertising
ACME Solar commissions second phase of additional 16 MW of its 100 MW wind power project in Gujarat
Godrej Properties adds INR 2,400 crore additional revenue potential to its recent acquisition on Sarjapur Road, Bengaluru
Research
Reduce Hindustan Unilever Ltd. - Kotak
Posted On : 2012-05-02 21:38:11( TIMEZONE : IST )
- Strong 4QFY12, on expected lines: HUL reported revenue growth of 15.5%, and (adjusted) PAT growth of 29% - in line with our and consensus expectations. Volume growth, at 10%, continued to be strong. The company reported strong growth in soaps and detergents and personal products segment. For FY12, HUL's domestic business has grown 18%, ahead of industry growth rate of 14%.
- Strong growth in soaps and detergents, improving growth in personal products: HUL reported 29% y/y growth in sales of soaps and detergents, and 93% growth in PBIT of the segment, on account of 3.8 ppt rise in margins. Personal Products returned to strong growth in the quarter, with 17% rise in sales and 23% rise in segment PBIT. Two key segments of HUL therefore, continue to show strong growth trends.
- Management continues to be confident about consumption trends, sees no let-up in demand: The management of HUL re-iterated that the company saw no decline in demand. The company also indicated that foods and beverages have seen some slowdown, which has not been seen in the HPC segment, likely the reason for continued strength in HUL.
- Industry Trends Continue to be favorable, earnings growth likely to be strong in the near-term: Given management outlook and strong trends in HUL results, we believe the current industry trends favor HUL, and are likely to sustain in the near-term. Therefore, we believe the company is likely to meet street estimates in the near-term, which may continue to yield rich valuations.
- Valuations Rich, Longer-Term issues remain: We find the valuations of HUL rich at CMP (28.4x PER FY13E), given the company's revenue and profit mix and long-term growth issues that result from it. We maintain that HUL's revenue streams leave little opportunity for long-term growth in line with the industry, and present trends - with lowered competitive intensity and rising margins in the most competitive segments, are unlikely to yield to extrapolation. Also, while we believe the earnings performance of HUL is likely to be strong in the near-term, we continue to see little scope for positive surprises hereon. We therefore maintain a negative view on HUL at CMP. REDUCE, with price target of Rs 381.
