HUL 2019-20 Annual Report Analysis

Tue, 31 Mar

HUL has announced its results for the year ended March 2020. Let us have a look at the detailed performance review of the company during FY19-20.

HUL Income Statement Analysis

• Operating income during the year rose 1.2% on a year-on-year (YoY) basis.
• The company's operating profit increased by 11.6% YoY during the fiscal. Operating profit margins witnessed a fall and down at 24.3% in FY20 as against 22.0% in FY19.
• Depreciation charges increased by 77.3% and finance costs increased by 257.6% YoY, respectively.
• Other income grew by 14.9% YoY.
• Net profit for the year grew by 11.5% YoY.
• Net profit margins during the year grew from 15.4% in FY19 to 17.0% in FY20.

HUL Income Statement 2019-20

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Net Sales	Rs m	393,110	397,830	1.2%
Other income	Rs m	5,500	6,320	14.9%
Total Revenues	Rs m	398,610	404,150	1.4%
Gross profit	Rs m	86,520	96,550	11.6%
Depreciation	Rs m	5,650	10,020	77.3%
Interest	Rs m	330	1,180	257.6%
Profit before tax	Rs m	86,040	91,670	6.5%
Tax	Rs m	25,440	24,110	-5.2%
Profit after tax	Rs m	60,600	67,560	11.5%
Gross profit margin	%	22.0	24.3
Effective tax rate	%	29.6	26.3
Net profit margin	%	15.4	17.0

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HUL Balance Sheet Analysis

• The company's current liabilities during FY20 stood at Rs 93 billion as compared to Rs 87 billion in FY19, thereby witnessing an increase of 7.5%.
• Current assets rose 3% and stood at Rs 123 billion, while fixed assets rose 19% and stood at Rs 76 billion in FY20.
• Overall, the total assets and liabilities for FY20 stood at Rs 199 billion as against Rs 183 billion during FY19, thereby witnessing a growth of 9%.

HUL Balance Sheet as on March 2020

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Networth	Rs m	78,430	82,140	4.7
Current Liabilities	Rs m	86,670	93,170	7.5
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	182,560	198,690	8.8
Current assets	Rs m	119,100	123,030	3.3
Fixed Assets	Rs m	63,460	75,660	19.2
Total Assets	Rs m	182,560	198,690	8.8

HUL Cash Flow Statement Analysis

• HUL's cash flow from operating activities (CFO) during FY20 stood at Rs 76 billion, an improvement of 31.4% on a YoY basis.
• Cash flow from investing activities (CFI) during FY20 stood at Rs 18 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY20 stood at Rs -68 billion on a YoY basis.
• Overall, net cash flows for the company during FY20 stood at Rs 26 billion from the Rs -280 million net cash flows seen during FY19.

HUL Cash Flow Statement 2019-20

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-19	Mar-20
Cash Flow from Operating Activities	Rs m	58,000	76,230	31.4%
Cash Flow from Investing Activities	Rs m	-4,380	17,910	-
Cash Flow from Financing Activities	Rs m	-53,900	-68,190	-
Net Cash Flow	Rs m	-280	25,950	-

Current Valuations for HUL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 31.2, an improvement from the EPS of Rs 28.0 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 2,298.2, stands at 80.1 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 65.7 times, while the price to sales ratio stands at 12.5 times.
• The company's price to cash flow (P/CF) ratio stood at 55.3 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Sales per share (Unadj.)	Rs	181.6	183.8
TTM Earnings per share	Rs	28.0	31.2
Diluted earnings per share	Rs	25.8	28.8
Price to Cash Flow	x	60.6	55.3
TTM P/E ratio	x	66.5	80.1
Price / Book Value ratio	x	44.1	52.2
Market Cap	Rs m	3,454,976	4,287,792
Dividends per share (Unadj.)	Rs	22.0	25.0

Ratio Analysis for HUL

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.3x during FY20, from 1.4x during FY19. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio deteriorated and stood at 78.7x during FY20, from 261.7x during FY19. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company improved and stood at 82.2% during FY20, from 77.3% during FY20. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 113.0% during FY20, from 110.1% during FY19. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company improved and stood at 34.6% during FY20, from 33.4% during FY19. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Current ratio	x	1.4	1.3
Debtors’ Days	Days	2	1
Interest coverage	x	261.7	78.7
Debt to equity ratio	x	0.0	0.0
Return on assets	%	33.4	34.6
Return on equity	%	77.3	82.2
Return on capital employed	%	110.1	113.0

To see how HUL has performed over the last 5 years, please visit here.

HUL Share Price Performance

Over the last one year, HUL share price has moved up from Rs 1,707.8 to Rs 2,298.2, registering a gain of Rs 590.4 or around 34.6%.

Meanwhile, the S&P BSE FMCG Index is trading at Rs 10,254.9 (up 5.8%). Over the last one year it has moved down from 11,741.5 to 10,254.9, a loss of 1,487 points (down 12.7%).

Overall, the S&P BSE SENSEX is down 24.2% over the year.

(To know more, check out historical annual results for HUL and quarterly results for HUL)

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