HUL

1QFY2011 Result Update | FMCG
July 28, 2010

HUL REDUCE
CMP Rs252
Performance Highlights Target Price Rs237
(Rs cr) 1QFY11 1QFY10 % yoy Angel Est % Diff Investment Period 12 months
Revenue 4,793.9 4,475.7 7.1 4,732.6 1.3
EBITDA 598.6 688.1 (13.0) 674.4 (11.2) Stock Info

OPM (%) 12.5 15.4 (289bp) 14.3 (176bp) Sector FMCG
PAT 514.7 536.7 (4.1) 562.7 (8.5) Market Cap (Rs cr) 55,850
Source: Company, Angel Research Beta 0.5
52 Week High / Low 306/218
HUL posted disappointing set of numbers for 1QFY2011, below our expectations
on the profitability front. While top-line growth was marginally above estimates, Avg. Daily Volume 357,554
driven by 11% volume growth, recurring earnings declined 4% yoy led by Face Value (Rs) 1.0
significant margin contraction due to 34% rise in ad-spends (on account of higher
competitive intensity in categories like detergents, soaps and shampoos). Other BSE Sensex 17,957
key highlights of the results include: 1) 2.4% yoy revenue growth in soaps and Nifty 5,398
detergents (S&D) segment, 2) EBIT margin contracted 626bp yoy, and 3) double-
Reuters Code HLL.BO
digit volume growth in detergents and personal products. We maintain Reduce on
the stock. Bloomberg Code HLVR@IN

Modest top line growth, higher ad-spends contract margins: For 1QFY2011, HUL
posted top-line growth of 7.1% yoy to Rs4,794cr (Rs4,476cr) largely driven by Shareholding Pattern (%)
volume growth of 11% (low base of 2% growth yoy). However, negative value
growth of ~4% (due to price cuts/promotional offers largely in detergents Promoters 52.0
category) dragged top-line growth. Overall FMCG sales grew 6.7% with a 5.2% MF /Banks /Indian FIs 16.2
growth in HPC and 13.4% growth in foods business. In terms of earnings, HUL
FII /NRIs /OCBs 16.5
posted 2% yoy decline to Rs533cr (Rs543cr) on a reported basis and 4% decline
to Rs515cr (Rs537cr) on a recurring basis, despite the 106% yoy spike in other Indian Public /Others 15.3
income to Rs124cr (Rs60cr), owing to weak top-line growth and significant
margin contraction by 289bp yoy, as ad-spend surged 34% yoy. Tax rate
remained stable at ~23% and interest costs reduced to almost nil.
Abs. (%) 3m 1yr 3yr
Outlook and Valuation: At the CMP of Rs252, the stock is trading at 22.5x Sensex 3.3 17.1 17.9
FY2012E earnings. We maintain a Reduce on the stock, with a Target Price of HUL 4.2 (8.9) 28.5
Rs237 (based on 21x FY2012E EPS) owing to weak earnings growth vis-à-vis the
FMCG sector, uncertain earnings environment and significantly higher
competitive intensity.

Key Financials
Y/E March (Rs cr) FY2009# FY2010 FY2011E FY2012E
Net Sales 20,239 17,524 19,343 21,515
% chg 48.0 (13.4) 10.4 11.2
Net Profit (Adj) 2,501 2,103 2,159 2,449
% chg 47.2 (15.9) 2.7 13.5
EBITDA (%) 13.1 14.5 13.2 13.6
EPS (Rs) 11.5 9.6 9.9 11.2
P/E (x) 22.0 25.0 25.5 22.5 Anand Shah
P/BV (x) 26.7 21.3 18.6 16.4 022-4040 3800-334
RoE (%) 121.3 81.4 73.0 72.8 anand.shah@angeltrade.com

RoCE (%) 110.4 101.3 86.6 86.5
Chitrangda Kapur
EV/Sales (x) 2.6 3.0 2.7 2.4
022-4040 3800-323
EV/EBITDA (x) 20.1 20.3 20.1 17.4
chitrangdar.kapur@angeltrade.com
Source: Company, Angel Research; #Note: FY2009 Results are for 15 Months

Please refer to important disclosures at the end of this report 1

HUL | 1QFY2011 Result Update

Exhibit 1: Quarterly performance

Y/E March (Rs cr) 1QFY11 1QFY10 % yoy FY2010 FY2009# % chg
Net Sales 4,793.9 4,475.7 7.1 17,523.8 20,239.3 (13.4)
Consumption of RM 2,446.6 2,311.7 5.8 8,877.9 10,810.0 (17.9)
(% of Sales) 51.0 51.6 50.7 53.4
Staff Costs 250.6 250.4 0.1 936.3 1,152.1 (18.7)
(% of Sales) 5.2 5.6 5.3 5.7
Advertising Expense 751.2 561.1 33.9 2,391.4 2,130.9 12.2
(% of Sales) 15.7 12.5 13.6 10.5
Other Expenses 746.9 664.4 12.4 2,769.7 3,490.2 (20.6)
(% of Sales) 15.6 14.8 15.8 17.2
Total Expenditure 4,195.3 3,787.6 10.8 14,975.4 17,583.3 (14.8)
Operating Profit 598.6 688.1 (13.0) 2,548.4 2,656.0 (4.1)
OPM (%) 12.5 15.4 14.5 13.1
Interest 0.1 5.2 (98.5) 7.0 25.3 (72.4)
Depreciation 53.5 42.5 25.9 184.0 195.3 (5.8)
Other Income 124.5 60.5 105.7 349.6 589.7 (40.7)
PBT (excl. Extr. Items) 669.5 700.9 (4.5) 2,707.1 3,025.1 (10.5)
Extr. Income/(Expense) 18.5 6.5 111.3 (25.1)
PBT (incl. Extr. Items) 688.0 707.4 (2.7) 2,818.4 3,000.0 (6.1)
(% of Sales) 14.4 15.8 16.1 14.8
Provision for Taxation 154.8 164.3 (5.8) 616.4 503.6 22.4
(% of PBT) 23.1 23.4 22.8 16.6
Recurring PAT 514.7 536.7 (4.1) 2,090.7 2,521.6 (17.1)
PATM (%) 10.7 12.0 11.9 12.5
Reported PAT 533.2 543.2 (1.8) 2,202.0 2,496.5 (11.8)
Equity shares (cr) 218.2 218.1 218.2 218.1
Adjusted EPS (Rs) 2.4 2.5 10.1 11.4

Source: Company, Angel Research; Note: #FY2009results are for 15months and not comparable

Top-line growth above estimates, volume growth sustained at 11%

For 1QFY2011, HUL posted top-line growth of 7.1% yoy to Rs4,794cr (Rs4,476cr)
largely driven by volume growth of 11% (low base of 2% growth yoy). However,
negative value of growth of ~4% (due to price cuts/promotional offers largely in
detergents category) dragged top-line growth. Overall FMCG sales grew 6.7% with a
5.2% growth in HPC and 13.4% growth in foods Business. In HPC, soaps &
detergents (S&D) segment posted muted growth of 2.4% yoy due to price cuts and
intense competition in detergents category.

Management has indicated that detergents (all three brands grew well) registered
double-digit volume growth and soaps regained volume momentum post portfolio
rejuvenation with premium soaps portfolio growing by strong double digits. Personal
products registered 11.4% yoy growth largely driven by double-digit volume growth.
In foods business, all segments grew well contributing to growth (beverages grew 8%
yoy, processed foods grew 23% yoy and ice creams grew 18% yoy).

July 28, 2010 2


Exhibit 2: Sixth qtr of single digit top-line growth Exhibit 3: Price cuts/low base boost volume growth
12 11 11
6,000 25.0
10 8
5,000 8 7
20.0 5
6
4,000
15.0 4 2 2

(%)

(%)
(Rs cr)

2 1
3,000
10.0 -
2,000 (2)
1,000 5.0 (4)
(6) (4)
- -

2QFY09

3QFY09

4QFY09

5QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11
2QFY09 4QFY09 1QFY10 3QFY10 1QFY11
Top-line (LHS) YoY growth (RHS)

Source: Company, Angel Research Source: Company, Angel Research

Recurring earnings declines 4% yoy despite 106% jump in other income

Earnings fell 2% yoy to Rs533cr (Rs543cr) on a reported basis and 4% to Rs515cr
(Rs537cr) on a recurring basis, despite the 106% yoy spike in other income to
Rs124cr (Rs60cr), owing to weak top-line growth and significant margin contraction.
Tax rates remained stable at ~23% and interest costs reduced to almost nil.

Significant spike in ad-spend leads to margin contraction by 289bp

At the operating level, HUL posted a weak performance, despite the fall in input costs
(down 61bp yoy, impressive given the price cuts undertaken this quarter) and savings
in staff costs (down 37bp yoy) largely due to higher overheads (up 73bp) and
significant jump in advertising spends (up 34% yoy in absolute terms, 313bp yoy)
due to intense competitive pressures (detergents, soaps and shampoos witnessing
higher competitive intensity). Hence, operating margin for the quarter contracted by
289bp yoy to 12.5% (15.4%) resulting in 13% yoy decline in EBITDA at Rs599cr
(Rs688cr).

In terms of categories, S&D segment witnessed sharp margin contraction by 626bp
yoy impacted by the price cuts and higher ad spends. Personal products registered a
margin expansion of 279bp yoy, while processed foods registered positive EBIT
margin of 5%.

Exhibit 4: Earnings in red for second quarter Exhibit 5: Spike in ad-spend continues, OPM dips
710 40.0 60.0 50.9 48.6 49.0
610 30.0 46.9 45.8 46.1 47.8 48.4 49.1
50.0
510 20.0
40.0
410 10.0
(Rs cr)

30.0
(yoy %)

(%)

310 - 16.1 16.0
20.0 13.3 11.8 13.2 15.4 14.4 12.3 12.5
210 (10.0)
10.0
110 (20.0)
10 (30.0) -

2QFY09 4QFY09 1QFY10 3QFY10 1QFY11 2QFY09 4QFY09 1QFY10 3QFY10 1QFY11
PAT (LHS) YoY growth (RHS) OPM Gross Margin


July 28, 2010 3


Exhibit 6: Segment-wise Performance
Y/E March (Rs cr) 1QFY11 1QFY10 % chg FY2010 FY2009# % chg
Soaps and Detergents 2,264 2,212 2.4 8,266 9,885 (16.4)
Personal Product 1,366 1,226 11.4 5,048 5,385 (6.3)
Beverages 538 500 7.7 2,142 2,300 (6.8)
Processed Foods 211 172 22.7 731 808 (9.6)
Ice Creams 105 89 18.1 231 235 (1.8)
Exports 265 257 2.8 1,005 1,576 (36.2)
Others 113 79 41.8 347 359 (3.3)
Less:Inter Segment Revenue - (4) (4) (8)
Total Gross Income 4,861 4,530 7.3 17,766 20,539 (51.4)
Soaps and Detergents 249 381 (34.8) 1,185 1,482 (20.0)
Personal Products 339 270 25.5 1,297 1,429 (9.3)
Beverages 70 70 (1.1) 320 308 3.8
Processed Foods 10.6 (1.3) 4 1 206.2
Ice Creams 15 15 (1.0) 13 9 47.2
Exports 23 21 10.5 59 108 (45.9)
Others (27) (28) (72) (134)
Total PBIT 679 728 (6.8) 2,805 3,203 (12.4)
Less: Interest Exp. (0) (5) (7) (25)
Less: Other Unallocable Exp 9 (20) (36) (169)
PBT 688 704 (2.2) 2,763 3,009 (8.2)
PBIT Margin (%)
Soap and Detergent 11.0 17.2 14.3 15.0
Personal Product 24.8 22.0 25.7 26.5
Beverages 12.9 14.1 14.9 13.4
Processed Foods 5.0 (0.7) 0.6 0.2
Ice Creams 14.6 17.5 5.5 3.7
Exports 8.6 8.0 5.8 6.9
Others (23.6) (35.2) (20.8) (37.5)
Source: Company, Angel Research; Note: #FY2009results are for 15months and not comparable

S&D sales beat estimates aided by strong volume growth

HUL’s S&D segment witnessed 2% yoy growth, above our estimates of 3% decline,
led by double-digit volume growth. However, overall growth was curtailed to single
digits owing to the steep price cuts in the detergents segment due to price war with
P&G. In detergents, Wheel delivered double-digit volume growth, while Rin sustained
strong volume growth post its re-launch. Soaps recorded steady performance led by
premium portfolio (grew ahead of market, Dove is now accessible to more customers
at Rs20 price point). However, PBIT margins in the segment collapsed by 626bp yoy
impacted by the steep price cuts and higher ad-spend.

We believe HUL’s core category of S&D will continue to remain under pressure in the
near-to-medium term until competitive pressures reduce. We expect the S&D
segment to post 4% growth in top-line in FY2011E, as growth in soaps and spike in
detergent volume due to the price cuts gets offset by negative value growth in
detergents. Moreover, we have modeled in around 200bp erosion in S&D segment
margins for FY2011E to factor in the impact of price cuts.

July 28, 2010 4


Exhibit 7: S&D continues to post low growth Exhibit 8: EBIT margins dip to new lows of 11%
2,300 30.0 500 20.0
25.0
2,200 400
20.0 15.0
2,100 300

(%)

(%)
15.0
(Rs cr)

(Rs cr)
10.0
2,000 10.0 200
5.0 5.0
1,900 100
-
1,800 (5.0) - -
Top-line (LHS) YoY growth (RHS) EBIT (LHS) EBIT % (RHS)


PP sales below estimates, double-digit volume growth continues

The personal products (PP) segment registered 11.4% yoy growth, ~3% below our
estimates on account of lower sales in shampoos (higher competitive pressures).
However, in terms of profitability, the segment registered margin expansion of
280bp yoy, despite higher ad-spend on account of product mix gains and favourable
base.

Exhibit 9: PP growth slows down to 11% Exhibit 10: EBIT margins improve yoy and qoq
1,600 20.0 500 35.0
1,400 30.0
400
1,200 15.0 25.0
1,000 300
(%)

(%)
20.0
(Rs cr)

(Rs cr)

800 10.0
200 15.0
600
400 5.0 10.0
100
200 5.0
- - - -
Top-line (LHS) YoY growth (RHS) EBIT (LHS) EBIT % (RHS)


Processed foods, ice creams do well, beverages disappoints

The foods segment recorded a growth of 13.4% yoy driven largely by strong growth
in processed foods (up 23% yoy) and ice creams (up 18% yoy). However, beverages
disappointed registering muted growth of 8% yoy as the tea market witnessed
slowdown. Processed foods grew in strong double digits with improved profitability
(EBIT margins expand 574bp yoy). All three core brands, Knorr (Knorr soupy noodles
accepted well), Kissan and Annapurna did well. The ice cream segment was led by
Impulse and Take Home categories.

July 28, 2010 5


Investment Concerns

High competitive intensity across categories, ITC a major threat: During the last
several quarters, management has constantly admitted that competitive intensity
across key categories of soaps, detergents, shampoos and skin care has
increased and is likely to further intensify. While corrective steps taken by HUL
over the last several quarters in terms of correcting pricing, promotional activity
and strengthening distribution have helped stabilise market share losses, we
believe ITC’s commitment to categories like soaps, shampoos and skin care is a
major threat for HUL in the long run.

OPM to decline as re-investment in ad-spend to sustain: Over FY2010-12E, we
have modeled in 100bp reduction in OPM (130bp in FY2011E) despite
incremental gains from cost rationalisation measures and moderate decline in
gross margins, as we expect ad spend to rise to ~14.5-15% levels from current
13.6% (reflected in 1QFY2011 results) due to high competitive intensity. Hence,
we expect EBITDA to log a muted 7% CAGR over FY2010-12E

Rich valuations for subdued 8% CAGR unjustified: At the CMP of Rs253, HUL is
trading at rich valuations of 22.5x FY2012E earnings, which is unjustified given
the subdued 8% CAGR expected over FY2010-12E (~3x PEG) vis-à-vis sector
growth (ex-HUL) of ~15-18%. In terms of historical valuations, HUL is trading at
50% premium to the Sensex (in line with the 5-yr average) and ~5% discount of
5-yr average P/E leaving little room for upside.

Outlook and Valuation

Post another quarter of weak results on the operational front, we have revised our
earnings estimates downwards by ~1-2% modeling in lower OPMs on account of the
significant increase in ad spends.

Exhibit 11: Change in Estimates
Old Estimate New Estimate % chg
(Rs cr) FY11E FY12E FY11E FY12E FY11E FY12E
Revenue 19,305 21,530 19,343 21,515 0.2 (0.1)
OPM (%) 13.5 13.7 13.2 13.6 (30bp) (15bp)
EPS (Rs) 10.1 11.4 9.9 11.2 (2.1) (1.2)
Source: Company, Angel Research

We expect HUL to post 10.8% CAGR in top-line over FY2010-12E, despite the steep
price cuts largely aided by steady performance of its personal care and foods
divisions (aided by innovations and higher ad spends), spike in detergents volume
(due to price cuts) and modest performance of its soaps business (aided by brand
re-launches and select price cuts). In terms of earnings, we expect HUL to post weak
8% CAGR during the period impacted by the dip in margins (due to the price cuts)
and higher tax rate (on account of increase in MAT). However, further price cuts,
spillover of price war to other categories and poor response to brand re-launches,
promotions and price cuts carry downside risks to our estimates.

At the CMP of Rs252, the stock is trading at 22.5x FY2012E earnings. We maintain
Reduce on the stock with a Target Price of Rs237 (based on 21x FY2012E EPS) owing
to weak earnings growth vis-à-vis the FMCG sector, uncertain earnings environment
and significantly higher competitive intensity.

July 28, 2010 6


Exhibit 12: Key Assumptions
FY2009# FY2010 FY2011E FY2012E
Gross top-line (Rs cr)
Soaps & Detergents 8,146 8,266 8,596 9,370
Personal Products 4,366 5,048 5,780 6,531
Beverages 1,869 2,142 2,432 2,736
Processed Foods 656 731 848 966
Ice Creams 198 231 268 303
Exports 1,177 1,005 1,126 1,250
Others 314 347 409 475
Top-line growth (%)
Soaps & Detergents - 1.5 4.0 9.0
Personal Products - 15.6 14.5 13.0
Beverages - 14.7 13.5 12.5
Processed Foods - 11.3 16.0 14.0
Ice Creams - 16.5 16.0 13.0
Exports - (14.6) 12.0 11.0
Others - 10.3 18.0 16.0
PBIT (Rs cr)
Soaps & Detergents 1,249 1,185 1,053 1,218
Personal Products 1,183 1,297 1,517 1,731
Beverages 255 320 347 397
Processed Foods (2) 4 13 17
Ice Creams 11 13 15 18
Exports 90 59 70 81
Others (104) (72) (74) (66)
PBIT Margin (%)
Soaps & Detergents 15.3 14.3 12.3 13.0
Personal Products 27.1 25.7 26.3 26.5
Beverages 13.6 14.9 14.3 14.5
Processed Foods (0.3) 0.6 1.5 1.8
Ice Creams 5.6 5.5 5.5 5.8
Exports 7.7 5.8 6.3 6.5
Others (33.1) (20.8) (18.0) (14.0)
Source: Company, Angel Research; # Note: FY2009 numbers are comparable 12 months numbers given for comparative purpose

July 28, 2010 7


Exhibit 13: Peer Valuation
Company Reco Mcap CMP TP* Upside P/E (x) EV/Sales (x) RoE (%) CAGR #
(Rs cr) (Rs) (Rs) (%) FY11E FY12E FY11E FY12E FY11E FY12E Sales PAT
Asian Paints Accumulate 24,939 2,600 2,773 6.6 27.4 23.4 3.2 2.6 40.8 37.8 17.5 17.4
Colgate Reduce 11,542 849 798 (6.0) 26.9 23.5 4.9 4.3 117.3 108.8 14.3 7.8
Dabur Neutral 17,254 200 195 (2.7) 30.7 25.7 4.3 3.6 39.9 39.1 17.4 16.0
GSKCHL Reduce 7,612 1,810 1,622 (10.4) 27.8 23.4 3.0 2.5 27.7 27.8 17.8 18.8
GCPL Accumulate 11,318 350 397 13.4 24.4 19.4 3.6 2.9 34.2 30.1 44.5 27.9
HUL Reduce 54,970 252 237 (6.1) 25.5 22.5 2.7 2.4 73.0 72.8 10.8 7.9
ITC Neutral 115,575 307 310 1.0 24.4 21.8 5.2 4.5 31.4 30.1 14.4 15.2
Marico Neutral 7,676 126 124 (1.6) 26.6 22.4 2.5 2.2 37.3 33.0 16.1 19.3
Nestle Neutral 28,493 2,955 2,955 0.0 36.2 30.0 4.7 4.1 118.2 118.6 16.5 20.4
#
Source: Company, Angel Research, Note: denotes CAGR for FY2010-12E, * In case of Neutral recommendation, TP = Fair value

Exhibit 14: Angel v/s Consensus estimates
Top-line (Rs cr) FY2011E FY2012E EPS (Rs) FY2011E FY2012E
Angel estimates 19,343 21,515 Angel estimates 9.9 11.2
Consensus 19,288 21,478 Consensus 10.4 11.7
Diff (%) 0.3 0.2 Diff (%) (4.9) (4.0)
Source: Company, Angel Research

Exhibit 15: Returns - HUL v/s Sensex (Indexed to 100) Exhibit 16: One-yr forward P/E band

200% 350 18x 21x 24x 27x
Sensex HUL
300
150% 250
Share Price (Rs)

200
100% 150
100
50%
50
-
0%
Jan-06

Jan-07

Jan-08

Jan-09

Jan-10
Jul-05
Oct-05

Jul-06
Oct-06

Jul-07
Oct-07

Jul-08
Oct-08

Jul-09
Oct-09

Jul-10
Apr-05

Apr-06

Apr-07

Apr-08

Apr-09

Apr-10
Jul-07

Oct-07

Jan-08

Jul-08

Oct-08

Jan-09

Jul-09

Oct-09

Jan-10

Jul-10
Apr-07

Apr-08

Apr-09

Apr-10


Exhibit 17: One-yr forward P/E chart Exhibit 18: One-yr forward Premium v/s Sensex chart

40.0 200%
35.0
150%
30.0
25.0 100%
20.0
15.0 50%
10.0
5.0 0%
-
-50%
Jan-03
Jun-03

Feb-05
Jul-05

May-06
Oct-06
Mar-07

May-08
Oct-08
Mar-09

Jan-10
Jun-10
Apr-02
Aug-02

Nov-03
Apr-04

Aug-07

Aug-09
Sep-04

Dec-05

Dec-07

Jan-03

Feb-05

May-06
Oct-06
Mar-07

May-08
Oct-08
Mar-09

Jan-10
Apr-02
Aug-02

Nov-03
Apr-04

Aug-07

Aug-09
Jun-03

Sep-04

Jul-05
Dec-05

Dec-07

Jun-10

Source: Company, Angel Research, Note: Red line indicates 5-year average Source: Company, Angel Research, Note: Red line indicates 5-year average

July 28, 2010 8


Profit & Loss Statement Rs crore
Y/E March CY06 CY07 FY09# FY10 FY11E FY12E
Gross sales 13,035 14,715 21,650 18,220 20,202 22,529
Less: Excise duty 932 1,040 1,410 696 859 1,014
Net Sales 12,103 13,675 20,239 17,524 19,343 21,515
Total operating income 12,103 13,675 20,239 17,524 19,343 21,515
% chg 9.4 13.0 48.0 (13.4) 10.4 11.2
Total Expenditure 10,455 11,797 17,583 14,975 16,790 18,595
Cost of Materials 6,503 7,269 10,810 8,878 9,884 11,059
Advertising Exp 1,273 1,440 2,131 2,391 2,863 3,098
Personnel 643 768 1,152 936 1,025 1,140
Others 2,037 2,320 3,490 2,770 3,018 3,297
EBITDA 1,648 1,879 2,656 2,548 2,553 2,921
% chg 14.2 14.0 41.4 (4.1) 0.2 14.4
(% of Net Sales) 13.6 13.7 13.1 14.5 13.2 13.6
Depreciation& Amortisation 130 138 195 184 209 228
EBIT 1,518 1,740 2,461 2,364 2,344 2,693
% chg 15.1 14.7 41.4 (3.9) (0.8) 14.9
(% of Net Sales) 12.5 12.7 12.2 13.5 12.1 12.5
Interest & other Charges 11 25 25 7 1 1
Other Income 355 432 590 350 460 510
(% of PBT) 19.0 20.1 19.5 12.9 16.4 15.9
Share in profit of Associates - - - - - -
Recurring PBT 1,862 2,146 3,025 2,707 2,803 3,202
% chg 16.0 15.3 40.9 (10.5) 3.6 14.2
Extraordinary Expense/(Inc.) (316) (182) 4 (99) 0 0
PBT (reported) 2,177 2,329 3,021 2,806 2,803 3,202
Tax 322 403 524 604 645 752
(% of PBT) 17.3 18.8 17.3 22.3 23.0 23.5
PAT (reported) 1,540 1,743 2,501 2,103 2,159 2,449
Add: Share of associates - - - - - -
Less: Minority interest (MI) - - - - - -
PAT after MI (reported) 1,540 1,743 2,501 2,103 2,159 2,449
ADJ. PAT 1,855 1,925 2,496 2,202 2,159 2,449
% chg 3.8 29.7 (11.8) (2.0) 13.5
(% of Net Sales) 15.3 14.1 12.3 12.6 11.2 11.4
Basic EPS (Rs) 7.0 8.0 11.5 9.6 9.9 11.2
Fully Diluted EPS (Rs) 7.0 8.0 11.5 9.6 9.9 11.2
% chg 12.4 14.7 43.3 (16.0) 2.7 13.5
#
Note: FY2009 Results are for 15 Months

July 28, 2010 9


Balance Sheet Rs crore
SOURCES OF FUNDS
Equity Share Capital 221 218 218 218 218 218
Preference Capital - - - - - -
Reserves& Surplus 2,503 1,221 1,844 2,365 2,737 3,145
Shareholders Funds 2,723 1,439 2,062 2,584 2,955 3,363
Minority Interest - - - - - -
Total Loans 73 89 422 0 0 0
Deferred Tax Liability (225) (212) (255) (249) (249) (249)
Total Liabilities 2,572 1,315 2,229 2,335 2,707 3,114
APPLICATION OF FUNDS
Gross Block 2,463 2,669 2,882 3,582 3,869 4,219
Less: Acc. Depreciation 1,062 1,147 1,275 1,420 1,629 1,857
Net Block 1,401 1,523 1,607 2,162 2,240 2,362
Capital Work-in-Progress 110 186 472 274 387 422
Goodwill - - - - - -
Investments 2,414 1,441 333 1,264 1,764 2,264
Current Assets 3,170 3,277 5,601 5,368 5,697 6,247
Cash 417 201 1,777 1,892 1,839 1,965
Loans & Advances 765 680 758 617 696 796
Other 1,988 2,397 3,066 2,858 3,162 3,486
Current liabilities 4,523 5,111 5,784 6,733 7,382 8,181
Net Current Assets (1,353) (1,834) (183) (1,365) (1,684) (1,934)
Total Assets 2,572 1,315 2,229 2,335 2,707 3,114
#

Cash Flow Statement Rs crore
Profit before tax 1,862 2,146 3,025 2,707 2,803 3,202
Depreciation 130 138 195 184 209 228
Change in Working Capital (13) 122 (330) 1,391 258 371
Interest / Dividend (Net) (136) (142) (126) (122) (134) (144)
Direct taxes paid 322 403 524 604 645 752
Others 567 (26) (19) (84) 8 4
Cash Flow from Operations 2,087 1,836 2,220 3,473 2,499 2,909
(Inc.)/ Dec. in Fixed Assets (107) (289) (629) (502) (400) (385)
(Inc.)/ Dec. in Investments (594) 998 1,167 (931) (500) (500)
Cash Flow from Investing (701) 709 538 (1,434) (900) (885)
Issue of Equity 36 (633) 39 32 0 0
Inc./(Dec.) in loans 16 16 333 (422) 0 0
Dividend Paid (Incl. Tax) 1,511 2,292 1,677 1,656 1,787 2,042
Interest / Dividend (Net) (136) (148) (122) (122) (134) (144)
Cash Flow from Financing (1,324) (2,762) (1,181) (1,924) (1,653) (1,898)
Inc./(Dec.) in Cash 62 (216) 1,576 115 (53) 126
Opening Cash balances 355 417 201 1,777 1,892 1,839
Closing Cash balances 417 201 1,777 1,892 1,839 1,965
#

July 28, 2010 10


Key Ratios
Valuation Ratio (x)
P/E (on FDEPS) 30.0 28.5 22.0 25.0 25.5 22.5
P/CEPS 33.0 29.3 20.4 24.1 23.3 20.6
P/BV 20.2 38.3 26.7 21.3 18.6 16.4
Dividend yield (%) 2.4 3.6 3.0 2.6 2.8 3.2
EV/Sales 4.3 3.9 2.6 3.0 2.7 2.4
EV/EBITDA 31.7 28.4 20.1 20.3 20.1 17.4
EV / Total Assets 20.3 40.6 23.9 22.2 19.0 16.3
Per Share Data (Rs)
EPS (Basic) 7.0 8.0 11.5 9.6 9.9 11.2
EPS (fully diluted) 7.1 8.0 11.5 9.6 9.9 11.2
Cash EPS 7.7 8.6 12.4 10.5 10.9 12.3
DPS 6.0 9.1 7.5 6.5 7.0 8.0
Book Value 12.5 6.6 9.4 11.8 13.5 15.4
Returns (%)
RoCE 64.4 89.5 138.9 103.6 93.0 92.5
Angel RoIC (Pre-tax) - - - - - -
RoE 61.2 83.7 142.9 90.5 77.9 77.5
Turnover ratios (x)
Asset Turnover 4.9 5.1 7.0 4.9 5.0 5.1
Inventory / Sales (days) 47 52 46 45 46 46
Receivables (days) 13 12 10 14 14 14
Payables (days) 97 102 77 110 110 109
Net Working capital (days) (53) (54) (35) (68) (66) (66)
#

July 28, 2010 11


Research Team Tel: 022 - 4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com

Disclaimer
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.
Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make
investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this
document are those of the analyst, and the company may or may not subscribe to all the views expressed within.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,
nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,
compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or
other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in
the past.
Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
connection with the use of this information.
Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the
latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have
investment positions in the stocks recommended in this report.

Disclosure of Interest Statement HUL
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No

Note: We have not considered any Exposure below Rs 1 lakh for Angel, its Group companies and Directors.

Ratings (Returns) : Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
Reduce (-5% to 15%) Sell (< -15%)

July 28, 2010 12

HUL

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