HLL: Bogged down by short term concerns - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

HLL: Bogged down by short term concerns

Apr 9, 2002

FMCG major, Hindustan Lever (HLL), is slated to declare its first quarter results on April 15. However, the excitement that was built up post its heartening turnover growth in 4QFY02, has been dented. The management has already warned of a sluggish topline in the March quarter. Earlier, HLL's parent Unilever had indicated that their emerging markets business has been relatively weak in 1QFY03. Within that, the Indian business (read HLL) has witnessed a decline in underlying volume sales in the first two months of the current quarter.

The key reason for the sluggish topline expectation is a one time shortening of inventory in the distribution pipeline, in an effort to rationalise the supply chain. The management has indicated that this process is now almost complete and the one-off effect will be felt only in the March quarter. Last year this system also called RS NET was implemented in the soaps and detergents business, that is now extended across all categories. This extension will improve HLL's working capital management further and allow higher margins.

Market expectations for the topline growth in 1QFY03 range between 1.5%-3% and between 12-15% for bottomline growth. Our full year (FY03) estimates stand at 5% topline growth and around 9% bottomline growth (excluding any extraordinary income that may arise later). This conservative 9% growth in bottomline has come despite estimating an improved operating margin from 15.6% in FY02 to 17% in FY03E.

The stock has declined by nearly 15% to Rs 225 levels currently. Based on our estimated EPS (excluding extraordinary income or expenses) of Rs 8.1 in FY03, the stock trades at 28x FY03E earnings. Though any improvement in consumer sentiment may improve topline and bottomline growth going forward, as of now there seem no signs of it. That said, in the longer term, the management's efforts in rationalising its businesses, products and brands are likely to keep HLL at the forefront of the FMCG spectrum. The company will be the foremost beneficiary of a turnaround in rural demand.


Equitymaster requests your view! Post a comment on "HLL: Bogged down by short term concerns". Click here!

  

More Views on News

HUL 2019-20 Annual Report Analysis (Annual Result Update)

Aug 6, 2020 | Updated on Aug 6, 2020

Here's an analysis of the annual report of HUL for 2019-20. It includes a full income statement, balance sheet and cash flow analysis of HUL. Also includes updates on the valuation of HUL.

HUL Announces Quarterly Results (1QFY21); Net Profit Up 7.2% (Quarterly Result Update)

Jul 22, 2020 | Updated on Jul 22, 2020

For the quarter ended June 2020, HUL has posted a net profit of Rs 19 bn (up 7.2% YoY). Sales on the other hand came in at Rs 106 bn (up 4.4% YoY). Read on for a complete analysis of HUL's quarterly results.

HUL Announces Quarterly Results (4QFY20); Net Profit Down 1.2% (Quarterly Result Update)

May 4, 2020 | Updated on May 4, 2020

For the quarter ended March 2020, HUL has posted a net profit of Rs 15 bn (down 1.2% YoY). Sales on the other hand came in at Rs 90 bn (down 9.4% YoY). Read on for a complete analysis of HUL's quarterly results.

HUL 2018-19 Annual Report Analysis (Annual Result Update)

Jun 7, 2019 | Updated on Jun 7, 2019

Here's an analysis of the annual report of HUL for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of HUL. Also includes updates on the valuation of HUL.

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

I Recommended this Stock over Page Industries because it's Relevant to Doubling Your Income (Profit Hunter)

Sep 7, 2020

Things are not often what they seem in the market and how you can take advantage of this.

The NASDAQ Whale Could Harm Your Portfolio (Fast Profits Daily)

Sep 7, 2020

The discovery of Softbank pushing up prices on the NASDAQ will cause volatility in the market. Stay alert!

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

HUL SHARE PRICE


Sep 18, 2020 03:37 PM

TRACK HUL

COMPARE HUL WITH

MARKET STATS