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RESULTS REVIEW 2QFY19 13 OCT 2018
Hindustan Unilever NEUTRAL
HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters
Competing against itself HUL reported another quarter of broad-based growth with revenues growing by 12.5% (exp. 13%) with adjustment of 1% fiscal refunds. Volume growth was healthy at 10% (exp. 9%) driven by rural recovery, favorable base (4% in 2QFY18) and market share gain. Robust margin expansion resulted in EBITDA/APAT growth of 20/23% (exp. 18/18%). Rural acceleration (growing at 1.25x of urban),
favorable GST rates and company’s own initiatives (new launches, distribution expansion, digital push) have been supporting HUL’s performance in the last 5 quarters. HUL registered 3x growth in the last 5 quarters i.e. 15% vs. 5% growth in FY14-17. Premiumisation, input cost softening and cost control initiatives resulted in robust EBITDA growth (2x growth in the last 5 years i.e. 22% vs. 10% in FY14-17.
Management has successfully executed their strategy and most initiatives have played out well. The company has not only beaten its own average performance but has also grown ahead of its peers (relatively small size). We continue to be optimistic on HUL’s healthy revenue and EBITDA growth going ahead, but at a slower pace (heavy base) vs. last 5 quarters performance.
We value HUL based on 45x P/E on Sep-20 EPS to arrive at TP of Rs 1,691. HUL was our top pick, but considering rich valuation and limited upside, we downgraded the stock in 1QFY19 to NEUTRAL.
Other Highlights Broad based growth: Home Care/PC/F&R registered
12/10/13% revenue growth. Oral care growth remained muted on the back of sustained competition and shift in consumer preference towards the natural’s products. Premium laundry and personal wash sustained healthy volume led growth.
Robust 20% growth in EBITDA: Gross margin was down by 74bps YoY, due to delay in price hike. However, we were surprised by the broad-based stringent cost controls aided by technology and GST implementation. Employee/ASP/other expenses grew by mere 1/8/flat%. It led to EBITDA margin expansion of 162bps YoY (exp. 97bps) to 22%. Home Care/PC/F&R EBIT grew by 29/18/25%. APAT was up by 23% to Rs 15.2bn (exp. Rs 14.5bn).
Near-term outlook: We advise investors to hold the stock in the backdrop of improving consumer demand dynamics and volatile equity markets.
Financial Summary (Rs mn) 2QFY19 2QFY18 YoY (%) 1QFY19 QoQ (%) FY17 FY18 FY19E FY20E FY21E Net Revenue 92,340 83,090 11.1 94,870 (2.7) 3,31,620 3,55,450 3,99,985 4,52,106 5,11,509 EBITDA 20,190 16,820 20.0 22,510 (10.3) 63,400 74,990 88,473 1,02,062 1,17,599 APAT 15,220 12,360 23.1 15,670 (2.9) 19,770 20,790 25,962 29,714 34,119 EPS (Rs) 7.0 5.7 23.1 7.2 (2.9) 19.7 23.8 29.4 34.5 40.6 P/E (x) 79.7 65.9 53.2 45.4 38.6 EV/EBITDA (x) 52.5 44.3 37.3 32.2 27.7 RoCE (%) 53.6 64.0 71.4 72.6 73.4 Source: Company, HDFC sec Inst Research
INDUSTRY FMCG
CMP (as on 12 Oct 2018) Rs 1,570
Target Price Rs 1,691
Nifty 10,473
Sensex 34,734
KEY STOCK DATA
Bloomberg HUVR IN
No. of Shares (mn) 2,165
MCap (Rs bn)/(US$ mn) 3,398/46,115
6m avg traded value (Rs mn) 2,378
STOCK PERFORMANCE (%)
52 Week high / low Rs 1,809/1,216
3M 6M 12M
Absolute (%) (9.9) 11.1 26.5
Relative (%) (4.9) 9.2 18.6
SHAREHOLDING PATTERN (%)
Promoters 67.19
FIs & Local MFs 7.32
FPIs 12.11
Public & Others 13.38 Source : BSE
Naveen Trivedi [email protected] +91-22-6171-7324
Siddhant Chhabria [email protected] +91-22-6171-7336
HUL: RESULTS REVIEW 2QFY19
Page | 2
Quarterly Financials (Standalone) Particulars 2QFY19 2QFY18 YoY (%) 1QFY19 QoQ (%) 1HFY19 1HFY18 YoY (%) Net Sales 91,380 81,990 11.5 93,560 (2.3) 1,84,940 1,66,000 14.0%* Other Operating Income 960 1,100 (12.7) 1,310 (26.7) 2,270 2,380 (4.6) Total Income 92,340 83,090 11.1 94,870 (2.7) 1,87,210 1,68,380 11.2 Material Expenses 44,350 39,290 12.9 43,640 1.6 87,990 80,130 9.8 Employee Expenses 4,380 4,350 0.7 4,420 (0.9) 8,800 8,540 3.0 ASP 11,060 10,230 8.1 11,530 (4.1) 22,590 19,280 17.2 Other Operating Expenses 12,360 12,400 (0.3) 12,770 (3.2) 25,130 24,950 0.7 EBITDA 20,190 16,820 20.0 22,510 (10.3) 42,700 35,480 20.3 Depreciation 1,300 1,150 13.0 1,270 2.4 2,570 2,290 12.2 EBIT 18,890 15,670 20.5 21,240 (11.1) 40,130 33,190 20.9 Other Income 3,050 2,040 49.5 1,350 125.9 4,400 3,170 38.8 Interest Cost 70 60 16.7 70 - 140 120 16.7 PBT 21,870 17,650 23.9 22,520 (2.9) 44,390 36,240 22.5 Exceptional (350) 360 na (590) na (940) 230 na PBT (after exceptional) 21,520 18,010 19.5 21,930 (1.9) 43,450 36,470 19.1 Tax 6,270 5,250 19.4 6,640 (5.6) 13,330 11,550 15.4 RPAT 15,250 12,760 19.5 15,290 (0.3) 30,540 25,590 19.3 APAT 15,220 12,360 23.1 15,670 (2.9) 30,890 25,280 22.2 EPS (Adjusted) 7.0 5.7 23.1 7.2 (2.9) 14.2 11.6 22.2 As % Of Net Revenue 2QFY19 2QFY18 YoY (bps) 1QFY19 QoQ (bps) 1HFY19 1HFY18 YoY (bps) Material Expenses 48.0 47.3 74 46.0 203 47.0 47.6 (59) Employee Expenses 4.7 5.2 (49) 4.7 8 4.7 5.1 (37) ASP Expenses 12.0 12.3 (33) 12.2 (18) 12.1 11.5 62 Other Operating Expenses 13.4 14.9 (154) 13.5 (8) 13.4 14.8 (139) EBITDA Margin (%) 21.9 20.2 162 23.7 (186) 22.8 21.1 130 Tax Rate (%) 29.1 29.2 (1) 30.3 (114) 30.7 31.7 (99) APAT Margin (%) 16.5 14.9 161 16.5 (3) 16.5 15.0 149 Source: Company, HDFC sec Inst Research Note: *1HFY19 Revenue growth and EBITDA margin expansion is like-like (GST impact)
Revenue was up by 12.5% with addition of 1% fiscal refunds accounting adjustment. Fiscal tax benefits were added to other income (earlier net of excise duty) ASP spend was soft at 8% growth despite new launches and relaunches EBITDA growth of 20% was driven by volume growth and cost savings HUL reported a one-time expense of Rs 350mn owing to restructuring
HUL: RESULTS REVIEW 2QFY19
Page | 3
Quarterly Segmental (Standalone) Year to March (Rs mn) 2QFY19 2QFY18 YoY (%) 1QFY19 QoQ (%) 1HFY19 1HFY18 YoY (%) Segmental Revenues Home Care 30,800 27,390 12.4 31,460 (2.1) 62,260 57,860 16% PC 43,160 39,100 10.4 44,070 (2.1) 87,230 82,780 12% Foods & Refreshment 17,040 15,260 11.7 17,850 (4.5) 34,890 31,800 14% Others 1,340 1,280 4.7 1,490 (10.1) 2,830 2,720 9% Total 92,340 83,030 11.2 94,870 (2.7) 187,210 175,160 14% Segmental EBIT Home Care 4,920 3,830 28.5 6,020 (18.3) 10,940 8,310 31.6 PC 11,150 9,480 17.6 11,620 (4.0) 22,770 20,270 12.3 Foods & Refreshment 2,880 2,310 24.7 3,340 (13.8) 6,220 5,260 18.3 Others 20 (60) (133.3) (20) (200.0) - (110) (100.0) Total 18,970 15,560 21.9 20,960 (9.5) 39,930 33,730 18.4 (a) Interest Cost & Bank Charges 70 60 16.7 70 - 140 120 16.7 (b) Other Un-allocable Expenses 20 (60) (133.3) (20) (200.0) (3,660) (2,860) 28.0 PBT 21,520 18,010 19.5 21,930 (1.9) 43,450 36,470 19.1 Capital Employed Home Care (9,300) (5,040) na (9,300) na (9,300) (5,040) na PC (2,970) 1,240 na (2,230) na (2,970) 1,240 (339.5) Foods & Refreshment 6,110 5,780 5.7 4,240 44.1 6,110 5,780 5.7 Others 770 750 2.7 810 (4.9) 770 750 2.7 Total (5,390) 2,730 na (6,480) na (5,390) 2,730 (297.4) Unallocable Capital Employed 75,430 61,690 22.3 61,230 23.2 75,430 61,690 22.3 Total Capital Employed 70,040 64,420 8.7 54,750 27.9 70,040 64,420 8.7 Source: Company, HDFC sec Inst Research EBIT Margin EBIT Margin 2QFY19 2QFY18 YoY (bps) 1QFY19 QoQ (bps) 1HFY19 1HFY18 YoY (bps) Home Care 16.0 14.0 199 19.1 (316) 17.6 14.4 321 PC 25.8 24.2 159 26.4 (53) 26.1 24.5 162 Foods & Refreshment 16.9 15.1 176 18.7 (181) 17.8 16.5 129 Others 1.5 (4.7) na (1.3) na - (4.0) na Total 20.5 18.7 180 22.1 (155) 21.3 19.3 207 Source: Company, HDFC sec Inst Research
In the last 4-5 quarters home care’s premium portfolio has consistently outperformed HUL’s overall growth HUL has begun to take price hike to pass on crude inflation, particularly in the home care portfolio
HUL: RESULTS REVIEW 2QFY19
Page | 4
Net Revenue Growth Underlying Volume Growth
Source: Company, HDFC sec Inst Research Note: Like-to-like growth for 2QFY18-1QFY19
Source: Company, HDFC sec Inst Research
EBITDA APAT
Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research
We are encouraged by HUL’s broad-based growth. However the company was enjoying a favourable base in the last 4 quarters which will now normalise Price hike will materially support revenue growth in the medium term HUL grew by an impressive 12% YoY in a year (FY18) marked by disruptions
4 3 4 4
1
(1)
6 5
10
17 16 16
11
(3)
-
3
6
9
12
15
18
Q2F
Y16
Q3F
Y16
Q4F
Y16
Q1F
Y17
Q2F
Y17
Q3F
Y17
Q4F
Y17
Q1F
Y18
Q2F
Y18
Q3F
Y18
Q4F
Y18
Q1F
Y19
Q2F
Y19
%
76
4 4
-1
-4
4
0
4
11 11 1210
-6-4-202468
101214
Q2F
Y16
Q3F
Y16
Q4F
Y16
Q1F
Y17
Q2F
Y17
Q3F
Y17
Q4F
Y17
Q1F
Y18
Q2F
Y18
Q3F
Y18
Q4F
Y18
Q1F
Y19
Q2F
Y19
%
10.0
13.0
16.0
19.0
22.0
25.0
-
4,000
8,000
12,000
16,000
20,000
24,000
Q2F
Y16
Q3F
Y16
Q4F
Y16
Q1F
Y17
Q2F
Y17
Q3F
Y17
Q4F
Y17
Q1F
Y18
Q2F
Y18
Q3F
Y18
Q4F
Y18
Q1F
Y19
Q2F
Y19
EBITDA EBITDA Margin (%) - RHS
%Rs mn
8
10
12
14
16
18
6,000
8,000
10,000
12,000
14,000
16,000
Q2F
Y16
Q3F
Y16
Q4F
Y16
Q1F
Y17
Q2F
Y17
Q3F
Y17
Q4F
Y17
Q1F
Y18
Q2F
Y18
Q3F
Y18
Q4F
Y18
Q1F
Y19
Q2F
Y19
APAT NPM (%) - RHS
%Rs mn
HUL: RESULTS REVIEW 2QFY19
Page | 5
A&P Personal Care Performance
Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research Home Care Performance Foods & Refreshment Performance
Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research
Personal wash growth was driven by the premium portfolio (Dove and Pears) HUL launched a Rs 5 pack of Lifebuoy in select geographies to drive volume growth in rural Hair care witnessed broad-based double digit growth GST led price-cuts (>800 SKUs benefited) are aiding in driving growth for premium products Only 1 in 10 washes arise from premium detergent providing significant scope for premiumisation
10.00
11.00
12.00
13.00
14.00
6,000
7,000
8,000
9,000
10,000
11,000
12,000
Q2F
Y16
Q3F
Y16
Q4F
Y16
Q1F
Y17
Q2F
Y17
Q3F
Y17
Q4F
Y17
Q1F
Y18
Q2F
Y18
Q3F
Y18
Q4F
Y18
Q1F
Y19
Q2F
Y19
A&P A&P (%) of sales - RHS
%Rs mn
20.0
22.0
24.0
26.0
28.0
30.0
34,000
36,000
38,000
40,000
42,000
44,000
46,000
Q2F
Y16
Q3F
Y16
Q4F
Y16
Q1F
Y17
Q2F
Y17
Q3F
Y17
Q4F
Y17
Q1F
Y18
Q2F
Y18
Q3F
Y18
Q4F
Y18
Q1F
Y19
Q2F
Y19
Revenue EBIT Margin - RHS
%Rs mn
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
20,500
22,000
23,500
25,000
26,500
28,000
29,500
31,000
32,500
Q2F
Y16
Q3F
Y16
Q4F
Y16
Q1F
Y17
Q2F
Y17
Q3F
Y17
Q4F
Y17
Q1F
Y18
Q2F
Y18
Q3F
Y18
Q4F
Y18
Q1F
Y19
Q2F
Y19
Revenue EBIT Margin - RHS
%Rs mn
-2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0
8,000 9,000
10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000 18,000
Q2F
Y16
Q3F
Y16
Q4F
Y16
Q1F
Y17
Q2F
Y17
Q3F
Y17
Q4F
Y17
Q1F
Y18
Q2F
Y18
Q3F
Y18
Q4F
Y18
Q1F
Y19
Q2F
Y19
Revenue EBIT Margin - RHS
%Rs mn
HUL: RESULTS REVIEW 2QFY19
Page | 6
Personal Care Performance Particulars (Rs mn) Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Revenue 37,700 42,220 40,280 39,802 40,750 43,680 39,100 40,900 40,960 44,070 43,160 YoY Gr. (%) 2.1% -0.3% -2.7% 8.1% 3.5% 8.0% 20.0% 13.0% 14.0% 10.4% Revenue Mix (%) 45.3% 48.0% 47.6% 47.9% 45.9% 47.4% 47.1% 47.6% 45.0% 46.5% 46.7% EBIT 9,030 10,210 9,226 9,208 9,840 10,790 9,480 10,070 10,660 11,620 11,150 YoY Gr. (%) 0.3% 3.6% -7.1% 9.0% 5.7% 2.8% 9.4% 8.3% 7.7% 17.6% EBIT Margin (%) 24.0% 24.2% 22.9% 23.1% 24.1% 24.7% 24.2% 24.6% 26.0% 26.4% 25.8% EBIT Mix (%) 62.2% 64.7% 66.0% 68.9% 60.9% 59.4% 60.9% 65.8% 57.2% 55.4% 58.8% Note: Like-to-like revenue growth for 2QFY18-1QFY19
Home Care Performance Particulars (Rs mn) Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Revenue 27,980 28,760 27,770 26,891 30,040 30,470 27,390 27,410 31,020 31,460 30,800 YoY Gr. (%) 6.8% 3.2% 1.0% 7.4% 5.9% 13.0% 17.0% 21.0% 20.0% 12.4% Revenue Mix (%) 33.6% 32.7% 32.8% 32.4% 33.8% 33.1% 33.0% 31.9% 34.1% 33.2% 33.4% EBIT 3,020 3,560 2,800 2,342 3,890 4,480 3,830 3,540 5,090 6,020 4,920 YoY Gr. (%) 22.8% 24.7% -0.6% 28.8% 25.8% 36.8% 51.1% 30.8% 34.4% 28.5% EBIT Margin (%) 10.8% 12.4% 10.1% 8.7% 12.9% 14.7% 14.0% 12.9% 16.4% 19.1% 16.0% EBIT Mix (%) 20.8% 22.6% 20.0% 17.5% 24.1% 24.7% 24.6% 23.1% 27.3% 28.7% 25.9% Note: Like-to-like revenue growth for 2QFY18-1QFY19
Foods & Refreshment Performance Particulars (Rs mn) Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Revenue 14,640 14,870 14,470 14,426 15,950 16,540 15,260 15,480 17,350 17,850 17,040 YoY Gr. (%) 5.1% 5.4% 4.3% 6.5% 12.0% 10.5% 15.5% 12.0% 14.0% 13.0% Revenue Mix (%) 17.6% 16.9% 17.1% 17.4% 18.0% 18.0% 18.4% 18.0% 19.1% 18.8% 18.5% EBIT 2,324 2,090 1,863 1,974 2,470 2,950 2,310 1,800 2,870 3,340 2,880 YoY Gr. (%) 4.5% 14.1% 1.5% 6.3% 41.1% 24.0% -8.8% 16.2% 13.2% 24.7% EBIT Margin (%) 15.9% 14.1% 12.9% 13.7% 15.5% 17.8% 15.1% 11.6% 16.5% 18.7% 16.9% EBIT Mix (%) 16.0% 13.3% 13.3% 14.8% 15.3% 16.2% 14.8% 11.8% 15.4% 15.9% 15.2% Note: Like-to-like revenue growth for 2QFY18-1QFY19 Source: Company, HDFC sec Inst Research
Oral care growth was challenged after 2 consecutive quarters of recovery Premium mix in detergent rises by ~100bps annually for HUL Purifiers performance was subdued during the quarter Foods & Refreshment growth was driven by ice-creams, beverages and foods (Kissan and Knorr)
HUL: RESULTS REVIEW 2QFY19
Page | 7
Assumptions
FY17 FY18 FY19E FY20E FY21E Revenue Growth (%)
Home Care 4.9 15.0 13.1 13.5 13.5 PC 1.9 10.0 11.3 11.7 11.9 Foods 2.6 11.0 17.2 17.2 17.2 Refreshment 8.3 12.0 14.0 14.9 15.0 Total 3.3 12.0 12.5 13.0 13.1
EBIT Margin (%) Home Care 11.2 14.6 16.9 16.9 16.9 PC 23.7 25.3 26.6 27.3 28.1 Foods 7.7 8.5 10.0 11.5 12.7 Refreshment 15.7 17.2 17.7 18.2 19.0 Total 17.4 19.5 20.9 21.4 21.9
Gross Margin (%) 50.8 52.9 53.8 54.4 55.3 Employee (% of sales) 5.3 5.2 5.0 4.9 4.8 ASP (% of sales) 10.7 11.7 12.2 12.2 12.2 Distribution (% of sales) 4.6 4.4 4.2 4.2 4.2 Other Expenses (% of sales) 11.2 10.6 10.3 10.5 11.1 EBITDA Margin (%) 19.1 21.1 22.1 22.6 23.0 Tax Rate (%) 30.5 28.5 29.0 28.5 28.0 Source: Company, HDFC sec Inst Research | Note: FY18 revenue growth is like-like Estimates Change
FY19E FY20E FY21E
OLD NEW Chg (%) OLD NEW Chg (%) OLD NEW Chg (%) Net Sales 4,00,828 3,99,985 -0.2% 4,53,043 4,52,106 -0.2% 5,12,551 5,11,509 -0.2% EBITDA 86,610 88,473 2.2% 1,00,861 1,02,062 1.2% 1,16,757 1,17,599 0.7% APAT 62,343 63,583 2.0% 73,901 74,571 0.9% 88,044 87,762 -0.3% EPS 28.9 29.4 2.0% 34.2 34.5 0.9% 40.8 40.6 -0.3% Source: HDFC sec Inst Research
HUL: RESULTS REVIEW 2QFY19
Page | 8
Peer Set Comparison
Company MCap (Rs bn)
CMP (Rs) Reco. TP
(Rs) EPS (Rs) P/E (x) EV/EBITDA (x) Core RoCE (%)
FY19E FY20E FY21E FY19E FY20E FY21E FY19E FY20E FY21E FY19E FY20E FY21E HUL 3,398 1,570 NEU 1,691 29.4 34.5 40.6 53.2 45.4 38.6 37.3 32.2 27.7 71.4 72.6 73.4 ITC 3,356 275 BUY 382 10.2 11.3 12.6 27.0 24.4 21.8 17.0 15.2 13.4 37.5 38.1 40.2 GCPL 731 716 NR 773 17.4 20.3 23.9 41.1 35.3 29.9 31.6 27.2 23.3 20.1 22.7 26.4 Britannia 691 5,757 NEU 6,165 104.4 125.0 151.7 55.2 46.1 37.9 37.0 30.8 25.4 46.1 48.6 53.4 Dabur 719 408 BUY 484 9.7 11.7 13.8 42.0 34.8 29.6 35.3 29.1 24.5 52.7 59.3 66.1 Marico 407 315 BUY 392 7.9 10.2 12.1 40.0 30.8 26.1 29.0 22.9 19.4 44.3 54.8 61.3 Colgate 299 1,100 NEU 1,164 28.4 32.2 37.1 38.7 34.1 29.6 23.7 20.3 17.6 68.7 80.4 94.6 Emami 202 443 BUY 561 13.4 16.0 19.1 33.1 27.7 23.2 24.0 20.4 17.3 26.9 34.8 44.3 Jub. Food 157 1,187 BUY 1,550 25.0 30.3 37.1 47.6 39.1 32.0 25.1 21.0 17.7 54.5 68.1 83.5 Source: HDFC sec Inst Research
HUL: RESULTS REVIEW 2QFY19
Page | 9
Income Statement (Rs mn) FY17 FY18 FY19E FY20E FY21E Net Revenues 3,31,620 3,55,450 3,99,985 4,52,106 5,11,509 Growth (%) 3.0 7.2 12.5 13.0 13.1 Material Expenses 1,63,130 1,67,300 1,84,793 2,06,161 2,28,644 Employee Expense 17,430 18,600 20,088 22,097 24,748 ASP Expense 35,420 41,530 48,798 55,157 62,404 Distribution Expenses 15,160 15,470 16,808 18,999 21,495 Other expenses 37,080 37,560 41,025 47,632 56,618 EBITDA 63,400 74,990 88,473 1,02,062 1,17,599 EBITDA Growth (%) 5.4 18.3 18.0 15.4 15.2 EBITDA Margin 19.1 21.1 22.1 22.6 23.0 Depreciation 4,320 5,200 5,632 6,120 6,706 EBIT 59,080 69,790 82,841 95,941 1,10,894 Other Income (Inc. EO Items) 6,060 3,510 6,682 8,319 10,960 Interest 350 260 - - - PBT 64,790 73,040 89,522 1,04,261 1,21,854 Tax 19,770 20,790 25,962 29,714 34,119 RPAT 44,900 52,270 63,583 74,571 87,762 adjustment (2,420) (920) - - - APAT 42,480 51,350 63,583 74,571 87,762 APAT Growth (%) 2.0 20.9 23.8 17.3 17.7 Adjusted EPS (Rs) 19.7 23.8 29.4 34.5 40.6 EPS Growth (%) 2.1 20.9 23.8 17.3 17.7
Source: Company, HDFC sec Inst Research
Balance Sheet (Rs mn) FY17 FY18 FY19E FY20E FY21E SOURCES OF FUNDS Share Capital - Equity 2,160 2,160 2,160 2,160 2,160 Reserves 65,280 70,650 82,621 96,548 1,14,634 Total Shareholders Funds 67,440 72,810 84,781 98,708 1,16,794 Minority Interest 220 200 178 154 127 Long Term Debt - - - - - Short Term Debt 2,770 - - - - Total Debt 2,770 - - - - Net Deferred Taxes (1,700) (3,020) (3,020) (3,020) (3,020) Long Term Provisions & Others 7,940 11,160 11,986 12,926 13,983 TOTAL SOURCES OF FUNDS 76,670 81,150 93,925 1,08,767 1,27,884 APPLICATION OF FUNDS Net Block 44,190 45,280 46,648 48,527 51,822 CWIP 2,290 4,610 2,305 1,153 576 Other Non-current Assets 2,770 3,500 2,773 3,089 3,441 Total Non-current Assets 49,250 53,390 51,726 52,769 55,839 Inventories 25,410 25,130 27,926 31,345 35,117 Debtors 10,850 13,100 14,741 16,662 18,851 Other Current Assets 9,300 14,810 16,093 18,168 20,532 Cash & Equivalents 56,230 63,590 82,675 1,01,183 1,22,719 Total Current Assets 1,01,790 1,16,630 1,41,435 1,67,359 1,97,220 Creditors 61,860 71,700 80,683 91,197 1,03,180 Other Current Liabilities & Provns 12,510 17,170 18,552 20,163 21,996 Total Current Liabilities 74,370 88,870 99,236 1,11,361 1,25,175 Net Current Assets 27,420 27,760 42,199 55,998 72,045 TOTAL APPLICATION OF FUNDS 76,670 81,150 93,925 1,08,767 1,27,884
Source: Company, HDFC sec Inst Research
HUL: RESULTS REVIEW 2QFY19
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Cash Flow Statement (Rs mn) FY17 FY18 FY19E FY20E FY21E Reported PBT 62,420 73,370 89,522 1,04,261 1,21,854 Non-operating & EO Items 290 (820) - - - Interest Expenses (2,250) (2,340) - - - Depreciation 4,320 5,200 5,632 6,120 6,706 Working Capital Change 5,660 7,910 6,198 5,333 6,195 Tax Paid (18,590) (22,680) (25,962) (29,714) (34,119) OPERATING CASH FLOW ( a ) 51,850 60,640 75,392 86,000 1,00,636 Capex (14,520) (8,780) (4,695) (6,848) (9,424) Free Cash Flow (FCF) 37,330 51,860 70,697 79,152 91,212 Investments (1,420) (5,700) (4,990) (5,000) (5,000) Non-operating Income 4,210 3,800 - - - INVESTING CASH FLOW ( b ) (11,730) (10,680) (9,685) (11,848) (14,424) Debt Issuance/(Repaid) 4,600 - - - - Interest Expenses (140) (60) - - - FCFE 41,790 51,800 70,697 79,152 91,212 Share Capital Issuance - - - - - Dividend (35,720) (38,870) (43,200) (50,760) (58,320) Others (10,880) (10,820) (8,412) (9,884) (11,356) FINANCING CASH FLOW ( c ) (42,140) (49,750) (51,612) (60,644) (69,676) NET CASH FLOW (a+b+c) (2,020) 210 14,095 13,508 16,536 EO Items, Others 7,136 (16,360) - - - Closing Cash & Equivalents 18,280 34,850 48,945 62,453 78,989
Source: Company, HDFC sec Inst Research
Key Ratios FY17 FY18 FY19E FY20E FY21E PROFITABILITY (%) GPM 50.8 52.9 53.8 54.4 55.3 EBITDA Margin 19.1 21.1 22.1 22.6 23.0 EBIT Margin 17.8 19.6 20.7 21.2 21.7 APAT Margin 12.8 14.4 15.9 16.5 17.2 RoE 63.8 73.2 80.7 81.3 81.4 RoIC 168.4 247.3 368.3 632.5 1,045.0 RoCE 53.6 64.0 71.4 72.6 73.4 EFFICIENCY Tax Rate (%) 30.5 28.5 29.0 28.5 28.0 Fixed Asset Turnover (x) 4.3 4.3 4.4 4.6 4.7 Inventory (days) 28.0 25.8 25.5 25.3 25.1 Debtors (days) 11.9 13.5 13.5 13.5 13.5 Other Current Assets (days) 10.2 15.2 14.7 14.7 14.7 Payables (days) 68.1 73.6 73.6 73.6 73.6 Other Current Liab & Provns (days) 13.8 17.6 16.9 16.3 15.7 Cash Conversion Cycle (days) (31.7) (36.8) (36.9) (36.5) (36.2) Net D/E (x) (0.8) (0.9) (1.0) (1.0) (1.1) PER SHARE DATA (Rs) EPS 19.7 23.8 29.4 34.5 40.6 CEPS 21.7 26.2 32.0 37.4 43.7 Dividend 17.0 20.0 23.5 27.0 30.5 Book Value 31.2 33.7 39.3 45.7 54.1 VALUATION P/E (x) 79.7 65.9 53.2 45.4 38.6 P/BV (x) 50.2 46.5 39.9 34.3 29.0 EV/EBITDA (x) 52.5 44.3 37.3 32.2 27.7 EV/Revenues (x) 10.0 9.3 8.3 7.3 6.4 OCF/EV (%) 1.6 1.8 2.3 2.6 3.1 FCF/EV (%) 1.1 1.6 2.1 2.4 2.8 FCFE/Mkt Cap (%) 1.2 1.5 2.1 2.3 2.7 Dividend Yield (%) 1.1 1.3 1.5 1.7 1.9
Source: Company, HDFC sec Inst Research
HUL: RESULTS REVIEW 2QFY19
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RECOMMENDATION HISTORY
Rating Definitions BUY : Where the stock is expected to deliver more than 10% returns over the next 12 month period NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period SELL : Where the stock is expected to deliver less than (-)10% returns over the next 12 month period
Date CMP Reco Target 10-Oct-17 1,220 BUY 1,363 26-Oct-17 1,272 BUY 1,401 13-Nov-17 1,291 BUY 1,458 27-Dec-17 1,347 BUY 1,514 12-Jan-18 1,375 BUY 1,514 28-Feb-18 1,340 BUY 1,514 11-Apr-18 1,390 BUY 1,559 15-May-18 1,504 BUY 1,615
7-Jun-18 1,571 BUY 1,701 9-Jul-18 1,678 NEU 1,709
16-Jul-18 1,751 NEU 1,709 10-Oct-18 1,514 NEU 1,687 13-Oct-18 1,570 NEU 1,691
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
Oct
-17
Nov-
17
Dec-
17
Jan-
18
Feb-
18
Mar
-18
Apr-
18
May
-18
Jun-
18
Jul -1
8
Aug-
18
Sep-
18
Oct
-18
HUVR TP
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