HUL - 1QFY2013 Result Update - Angel Broking

HUL reported a strong set of numbers for the quarter. The company's top line grew by 13.7% yoy to Rs.6,250cr, in-line with our estimates. Net profit for the quarter grew by 47.7% yoy to Rs.855cr, above our estimates. During the quarter, the company had one-off gain of Rs.607cr due to sale of property. We remain Neutral on the stock.

Key highlights during the quarter: Domestic consumer business grew by 18.7% yoy, with strong underlying volume growth of 9%. Both home and personal care (HPC) and foods businesses posted healthy double digit growth of 20.6% and 10.6% respectively. In the HPC business, soaps and detergent (S&D) segment posted strong revenue growth of 24% yoy, while the personal products segment grew by 17% lead by double-digit volume-led growth for the twelfth consecutive quarter. At the operating level, OPM expanded by 137bp yoy to 13.4% aided by a 216bp yoy improvement in gross margin on account of price hikes and softening of raw material prices. However, advertising expenses rose by 160bp on yoy basis. During the quarter, the bottomline was boosted by Rs.70cr of treasury income from investments in mutual funds.

Outlook and valuation: We expect HUL to post a ~15.5% CAGR in its top line over FY2012-14E, largely aided by steady performance of all its major divisions. In terms of earnings, we expect HUL to post a ~17.6% CAGR. At the CMP, the stock is trading at 28.2x FY2014E earnings. We maintain our Neutral view on the stock.

Source : Equity Bulls

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