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Hindustan Unilever: Deflationary Pressures Curb Growth - Views on News from Equitymaster
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  • Jan 21, 2016 - Hindustan Unilever: Deflationary Pressures Curb Growth

Hindustan Unilever: Deflationary Pressures Curb Growth
Jan 21, 2016

HUL declared results for the quarter ended December 2015. The company reported a revenue growth of 3% YoY during the quarter, while profits declined by 22% YoY. Here is our analysis of the results.

Performance summary

  • Standalone revenues grow by 3% YoY during the quarter, Growth led by the company's packaged foods, beverages and personal products businesses.
  • Operating profits rise by 4% YoY as margins expand to 17.9% as compared to 17.6% in same period of last year. Benign input cost environment leads to margin expansion.
  • Net profits fall by 22% YoY, led by an impact of onetime items (loss during 3QFY16, gain during 3QFY15). Core earnings (EBIT) come in higher by 8% YoY during the quarter.
  • During 9mFY16, revenues rise by 4% YoY, while operating profits rise by 9% YoY.

Standalone financial performance

(Rs m) 3QFY15 3QFY16 Change 9mFY15 9mFY16 Change
Net sales 77,743 79,810 2.7% 231,300 240,415 3.9%
Expenditure 64,043 65,502 2.3% 192,014 197,784 3.0%
Operating profit (EBDITA) 13,700 14,308 4.4% 39,286 42,631 8.5%
EBDITA margin (%) 17.6% 17.9%   17.0% 17.7%  
Depreciation 731 822 12.4% 2,162 2,332 7.9%
Interest 42 1 -98.8% 168 2 -99.1%
Other income 1,201 1,396 16.3% 5,200 4,184 -19.5%
Exceptional items 3,581 (796)   4,464 (820)  
Profit before tax 17,708 14,086 -20.5% 46,619 43,661 -6.3%
Tax 5,187 4,372 -15.7% 13,648 13,733 0.6%
Effective tax rate 29% 31%   29% 31%  
Profit after tax/(loss) 12,522 9,714 -22.4% 32,972 29,928 -9.2%
Net profit margin (%) 16.1% 12.2%   14.3% 12.4%  
No. of shares (m)       2,163.2 2,163.9  
Diluted earnings per share (Rs)*         17.9  
Price to earnings ratio (x)         43.7  

(*On a trailing 12-month basis)

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  2. Neither Equitymaster, Research Analyst or his/her relative have any financial interest in the subject company.
  3. Equitymaster's Associate has financial interest in Hindustan Unilever.
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