HLL: A curtain raiser - 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: A curtain raiser

Oct 16, 2001

FMCG bellwether, Hindustan Lever, is set to announce its third quarter results today. We take a quick glance at what has happened so far in FY02 and also preview what to expect.

(Rs m)2QFY012QFY02Change1HFY011HFY02Change
Net Sales28,79729,3131.8%54,93855,7381.5%
Other Income77491217.9%1,6741,93415.5%
Total expenditure25,34425,3900.2%48,58248,431-0.3%
Operating Profit (EBDIT)3,4533,92313.6%6,3567,30715.0%
Operating Profit Margin (%)12.0%13.4%11.6%13.1%
Interest21220.9%5633-41.9%
Depreciation330328-0.6%665660-0.8%
Profit before Tax & extraordinary income3,8764,48515.7%7,3098,54817.0%
Extraordinary income-1,199-1,425
Tax1,0081,0181.0%1,8151,9125.3%
Profit after Tax/(Loss)2,8684,66662.7%5,4948,06146.7%
Effective tax rate (%)26.0%22.7%24.8%22.4%
Net profit margin (%)10.0%15.9%10.0%14.5%
No. of Shares (eoy) (m)2200.62200.62200.62200.6
Earnings per share*5.28.55.07.3
*(annualised)
Current P/e ratio (incl. Extraordinary income)26.430.6

Hindustan Lever (HLL) had reported a net profit growth of 21% in its 2QFY02. However, net sales growth continued to be slack (up 1.8%). On a consolidated half yearly basis, HLL had recorded a 1.5% growth in turnover and a 21% growth in bottomline (excluding extraordinary incomes).

Sales growth
FMCG ProductsKey brands1HFY02
Home & Personal Care
Fabric washSurf, Rin, Wheel5.2%
Skin careLakme, Pond's, Fair & Lovely22.1%
Home careDomex, Raid15.3%
Personal washLux, Lifebouy, Liril-4.4%
Oral carePepsodent, Close-up-3.7%
Hair careClinic, Sunsilk7.5%

The data emanating from ORG-MARG has not been too good for HLL between July - September, 2001. The company's soap business continues to get hit. Based on the trends available, HLL is likely to post a topline growth in line with the past two quarters (up 1.5%-2%). HLL's bottomline growth is likely to be in the range of 19%-20%.

Sales growth
Foods business Key brands1HFY02
Packet teaTaj Mahal, Lipton, Brooke Bond-14.5%
Culinary productsKissan sauces & noodles -7.1%
Branded staplesAnnapurna atta & salt-13.0%
CoffeeBru10.1%
Oil & fats16.1%
Ice creamWalls-3.9%

However, as chairman Banga said the other day, one should also look at margin expansion to guage performance. However, this looks unlikely for the soaps and detergents business. With downtrading starting to affect food processing companies as well, the margin expansion may not be possible in this quarter, unlike in 1HFY02, when overall margins in HLL's food business were up 350 basis points.

More than the results, this time the focus would be on the 'debenture plan', a plan to return funds to shareholders. This is likely to improve HLL's RONW in the coming years. But more on this, post the management's meeting today.

At the current price of Rs 224 the stock trades at P/E of 29x FY02 expected earnings (including extraordinary incomes).

Equitymaster requests your view! Post a comment on "HLL: A curtain raiser". Click here!

  

More Views on News

HUL Announces Quarterly Results (2QFY22); Net Profit Up 10.5% (Quarterly Result Update)

Oct 20, 2021 | Updated on Oct 20, 2021

For the quarter ended September 2021, HUL has posted a net profit of Rs 22 bn (up 10.5% YoY). Sales on the other hand came in at Rs 130 bn (up 11.7% YoY). Read on for a complete analysis of HUL's quarterly results.

HUL's Marketcap Tops Rs 6 Tn. Key Factors Driving the Stock (Views On News)

Aug 21, 2021

HUL became the fifth Indian company to achieve the milestone of a Rs 6-tn market capitalisation.

HUL 2020-21 Annual Report Analysis (Annual Result Update)

Jul 26, 2021 | Updated on Jul 26, 2021

Here's an analysis of the annual report of HUL for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of HUL. Also includes updates on the valuation of HUL.

Adani Wilmar IPO to Hit the Market Soon. Should you Apply? (Views On News)

Nov 29, 2021

The parent company of the brand Fortune is set to raise Rs 45 bn from the market.

What Happens if ITC Hives off ITC Infotech? (Views On News)

Nov 20, 2021

The cigarette to hotel conglomerate is reportedly mulling the demerger of its software business at a valuation of around Rs 250 bn.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

6 Penny Stocks that Rallied 1,000%+ in One Year (Views On News)

Dec 6, 2021

These penny stocks shed their penny status by surging 1,000% or more in the last one year.

The Biggest Winners and Losers in India's Transition to Electric Vehicles (Profit Hunter)

Nov 26, 2021

How India's EV transition could be a major headwind for the incumbents.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

HUL SHARE PRICE


Dec 9, 2021 (Close)

TRACK HUL

HUL - NOVATEOR RESEARCH LABORATORIES COMPARISON

COMPARE HUL WITH

MARKET STATS