X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
HLL: In diversification mode - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Dec 20, 2000

    HLL: In diversification mode

    The FMCG giant HLL has decided to restructure its brand portfolio and take up new businesses. The decision of the company is on the back of flagging topline growth. During the nine months ended September 2000, the companyís revenues increased by a mere 4%.

    Lower agricultural growth negatively affected the consumption pattern of rural India. This coupled with a consumer down trading resulted in a drop in the companyís volumes. As a result, HLL is evaluating the feasibility of entering several new businesses to fuel its sales growth. These include confectionery, consumer healthcare, water and opportunities on the Internet.

    HLLís plan to invest in the Internet, particularly in B2B is expected to improve its margins significantly. It will also bring supply chain efficiencies to the company. HLL will invest about Rs 1 bn every year on e-ventures and 80% of that in B2B. Once the televisions are linked to the Internet, it will enable FMCG companies to reach out even to the rural areas. The result of focusing on the Internet is reflected from the increasing operating margins. During the nine months ended September 2000, HLLís operating margins improved by 107 basis points to 12.5%.

    Excellent returns
    Year ending December FY98 FY99 FY00 FY01E
    RONW 44.4% 47.0% 50.9% 51.9%
    ROA 15.9% 18.5% 21.0% 24.8%
    ROIC 41.0% 42.2% 47.9% 50.8%

    Along with identifying new business areas, HLL is also focusing on pruning its strong portfolio of 110 brands. The company could dispose of some of its brands and migrate the other small brands to larger brands. The exercise is similar to the one announced earlier this year by its parent Unilever which aims to focus on its 400 core brands.

    The future prospects for HLL are expected to improve with its ability to widen product base in lower price segment, successful ventures into new business areas, product innovation and greater market penetration. The companyís foray into branded staples, ice creams and e-commerce have the potential to rejuvenate dwindling growth rates. However, the companyís move to enter into several new areas may result in the lack of focus to its core business areas.

    At the current market price of Rs 203 HLL is trading at a P/E multiple of 35 times its December 2001 projected earnings, with a market cap to sales ratio of 4 times. Historically, the company has traded in the P/E range of 45-50 times.

     

     

    Equitymaster requests your view! Post a comment on "HLL: In diversification mode". Click here!

      
     

    More Views on News

    Marico: Earnings Hit by Lower Volumes and Firming Input Prices (Quarterly Results Update - Detailed)

    Aug 9, 2017

    While GST implementation brought down volumes and profitability in the short run, Marico remains optimistic in the long run.

    HUL: A Slow End to a Dull Year... (Quarterly Results Update - Detailed)

    May 9, 2016 | Updated on May 11, 2016

    HUL announced its results for the quarter and year ended March 2016. While revenues rose by 4% YoY, net profits increased by 7% YoY.

    Hindustan Unilever: Deflationary Pressures Curb Growth (Quarterly Results Update - Detailed)

    Jan 21, 2016

    HUL announced its results for the quarter ended December 2015. While revenues were up by 3% YoY, profits came in lower by 22% YoY.

    Hindustan Unilever: Fails to meet expectations (Quarterly Results Update - Detailed)

    Oct 16, 2015

    HUL announced its results for the quarter ended September 2015. While revenues were up by 4% YoY, profits came in lower by 3% YoY.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    HIND. UNILEVER SHARE PRICE


    Aug 18, 2017 (Close)

    TRACK HIND. UNILEVER

    • Track your investment in HIND. UNILEVER with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    MORE ON HIND. UNILEVER

    HIND. UNILEVER 8-QTR ANALYSIS

    Detailed Quarterly Results With Charts

    COMPARE HIND. UNILEVER WITH

    MARKET STATS