Hindustan Unilever Ltd (HUL)
April 10, 2008 Stock data
Sensex: CMP (Rs): Target price (Rs): Downside (%): 52 Week h/l (Rs): Market cap (Rs cr) 6m Avg vol BSE (‘000 nos): No of o/s shares (mn): FV (Re): Bloomberg code: Reuters code: BSE code: NSE code: 15,791 244 238 2.5 256/169 53,229 3,016 2,178 1 HUVR IN HLL.BO 500696 HINDUNILVR
HUL recorded a robust performance during F12/07 driven by strong 14% yoy growth in the domestic FMCG business. The core HPC segment recorded sharp 12.3% yoy growth led by 9% and 14% increase in personal care and soaps & detergents revenues respectively. T he company has started focusing on new growth categories like high-end personal care (skin, hair care), foods and water. It has invested heavily in the water purifier business and expects to complete national rollout by F12/08. Heavy onslaught of competition in the core categories from emerging players like ITC, will result in higher adspend. Firm raw material prices will further add pressure on margins going forward. While we remain positive on the business model of the company, we recommend a SELL based on expensive valuations with a price target of Rs238 – downside of 2.5%. Key highlights from CY07 annual report ä HUL has bought back 30,235,772 equity shares of Re1 each (from October 03, 2007 to January 31, 2008) at an average price of Rs207.13 (upper price limit was decided at Rs230 per share). HUL has bought back these shares through open market route with an investment of ~Rs6.26bn. ä During F12/07, HUL recorded healthy 13.3% yoy revenue growth (highest in the last few years). Detergents segment recorded strong 17.8% yoy growth highest in the past nine years. The underlying volume growth declined to 5% in F12/07 from 7-8% recorded in F12/05-06. Personal care and coffee segment recorded drop in volumes. HUL has made substantial investments in the skin care, processed foods and water (Pureit) business. Many of HUL’s brands continued to grow strongly with Wheel, Brooke...