MOSL: HINDUSTAN UNILEVER (Buy)-Impressive volumes, strong margin expansion despite high Ad-spend
Hindustan Unilever: Impressive volumes, strong margin expansion despite high adspend
(HUVR IN, Mkt Cap USD46.5b, CMP INR1372, TP INR1585, 16% Upside, Buy)
- HUVR’s 3QFY18 net sales rose 11.5% YoY to INR85.9b. Domestic consumer business grew 17% YoY, with 11% underlying volume growth. EBITDA increased by 23.9% YoY to INR16.8b (est. of INR16b) and PAT (bei) by 30.2% YoY to INR12b (est. of INR10.9b).
- Segmental performance: Home care and Personal care revenues were up 1.9% and 2.8% YoY, respectively. Sales of Foods and Refreshments – the relatively small segments – were up 7.5% and 7.2% YoY, respectively. EBIT margin expanded by 420bp YoY for Home care and 150bp for Personal care, while it contracted by 570bp for Foods and 110bp for Refreshment.
- Gross margin expanded 320bp YoY to 52.7%. High ad spends (+140bp YoY) and a slight increase in employee costs (+40bp YoY) were partially offset by lower other expenditure (-60bp YoY). Thus, EBITDA margin expanded 200bp YoY to 20.2%. Comparable margin expanded 110bp YoY.
- Concall highlights: (1) Management stated it is still early to call out a big recovery for the sector, but demand is picking up across segments. (2) 3Q was another quarter of rural growth being better than urban (base quarter was weak for rural because of demonetization).
Hindustan Unilever is predominantly engaged in manufacturing and distributing consumer products mainly in India. Co. operates five main business segments: Soaps and Detergents include soaps, detergent bars, detergent powders, detergent liquids, scourers, etc.; Personal Products include products in the categories of Oral Care, Skin Care (excluding soaps), Hair Care, Deodorants,Talcum Powder, Colour Cosmetics, Ayush services; Beverages include tea and coffee; Package Foods include Branded Staples (Atta, Salt, Bread, etc.), Culinary Products (tomato based products, fruit based products, soups, etc.) and Frozen desserts; Others include Exports, Chemicals, Water business, Infant Care Products.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.