Hindustan Unilever - 4QFY13 Results Update - Angel Broking

HUL has delivered an encouraging set of numbers for 4QFY2013, with the 6% volume growth in the domestic consumer marking a reversal in the trend of decline in volume growth over the past few quarters. We remain Neutral on the stock.

Key highlights during the quarter: The company's top-line and bottom-line rose by 12.5% and 18.1% respectively. The OPM stood at 13.7%, ahead of our estimates of 13.4%. HUL managed to revive volume growth (6% yoy in 4QFY2013 vs 5% yoy in 3QFY2013) by passing on some benefits of reduction in raw material costs to customers by way of price cuts, and with increased advertising and promotion (A&P) expenditure bearing results. The Soaps and Detergents segment grew by 12.6% yoy. The high margin Personal Products segment rose by 12.1% yoy, while the Beverages segment grew 18.3% yoy.

HUL's promoter Unilever PLC has decided to make a voluntary open offer to buy a 22.52% stake, which would take its stake in HUL to 75%. The open offer has been priced at Rs. 600/share. As per Unilever's CEO Paul Polman, the US$5.4bn deal represents a further step in Unilever's strategy to invest in emerging markets and offers a liquidity opportunity at an attractive premium for existing shareholders. In our view, this move by Unilever indicates the huge confidence it has on the potential of India's consumer sector.

Outlook and valuation: We expect HUL to post an ~14.7% and 11.7% CAGR in its top-line and bottom-line respectively, over FY2013-15E. At the current market price, the stock is trading at 31.1x FY2015E earnings. We maintain our Neutral view on the stock.

Source : Equity Bulls

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