-Stock Quarterly Result -Income Statement Evolution -Outlook and Valuation -Company Ratios -Financial Snapshot

1. 22nd AUGUST
Hindustan Unilever Limited
2019

2. 1
HINDUNILVR
22nd AUGUST 19
RECOMMENDATION
CALL BUY
CMP 1873.00
TARGET 2060.00
TIME FRAME 6 MONTH
QUICK VIEW
Face Value (Rs.) RS 1.00
Div. Yield (%) 1.19 %
No of shares (lakh) 2,164.80
52-week High/Low
Rs 1,876.45/ 1,477.20
NSE Symbol- HINDUNILVR
BSE Code 500696
Market cap (Rs. Cr.) 4,05,218.28
SHAREHOLDING PATTERN
Promoters 67.18
FIIs 12.06
INSTITUTIONAL 18.99
Market Cap 4,02,220 Cr (Large Cap)
Risk Category HIGH RISK

3. 2
Strong start to the year
Hindustan Unilever Ltd. (HUL), a subsidiary of Unilever PLC, is India’s leading FMCG Company. It has over 35
brands spanning across 20 distinct categories, such as soaps, detergents, shampoos and skin care.
 Q1FY20 total revenue grew 6.6% YoY to Rs. 10,114cr, driven by underlying volume growth of 5% YoY
(domestic consumer growth at 7%)
 EBITDA margin expanded 250bps YoY to 26.2% (+150bps YoY on comparable basis) owing to improved product
mix and cost containment efforts.
 Adj. PAT rose 11.7% YoY to Rs 1,751cr in Q1FY20 (Reported PAT growing 14.8% YoY).
 We retain our HOLD rating on the stock, with a revised target price of Rs 1,790, based on 48x FY21E adj. EPS.
BUSINESS OVERVIEW
Hindustan Unilever Limited (HUL) is a British-Dutch manufacturing company headquartered
in Mumbai, India. Its products include foods, beverages, cleaning agents, personal care products, water
purifiers and consumer goods.
HUL was established in 1933 as Lever Brothers and following merger of constituent groups in 1956 was
renamed as Hindustan Lever Limited. The company was renamed in June 2007 as "Hindustan Unilever
Limited".
As of 2019 Hindustan Unilever portfolio had 35 product brands in 20 categories and employs 18,000
employees with sales of Rs. 34,619 crores in 2017-18.
In December 2018, HUL announced its acquisition of Glaxo Smithkline's India business for $3.8 billion in an all
equity merger deal with 1:4.39 ratio. However the integration of 3800 employees of GSK remained uncertain
as HUL stated there was no clause for retention of employees in the deal. In January 2019, HUL said that it
expects to complete the merger with Glaxo Smith Kline Consumer Healthcare (GSKCH India) this year.
HINDUNILVR
22nd AUGUST 19

4. 3
INCOME STATEMENT EVOLUTION
HINDUNILVR
22nd AUGUST 19

5. 4
Valuations
COMPANY RATIOS
Dividend Yield: 1.19 %
P/E : 63.96
P/BV (x): 52.40
Return on Equity (%): 83.26 %
HUL continued to deliver a good performance in the challenging environment. Rural demand has
slowdown on account of tight liquidity condition. Farm sector distress has been weighing on FMCG
demand. However, the management stated that the demand should be stable in medium to long term
with a focus on delivering consistent, competitive, profitable and Responsible growth. Premiumization
across products categories, innovation-led new product launches, recovery in rural demand and
integration of GSK product portfolio are the key building blocks for future growth.
While broad based growth and margin expansions across segments are some of the key positives,
current steep valuations of 52x FY20E and 46x FY21E offer limited upside. We maintain our HOLD rating
on the stock with a revised price target of Rs. 2,060 based on 48x FY21E.
PFC
6TH JUNE 19
HINDUNILVR
22nd AUGUST 19

6. 5
FINANCIAL SNAPSHOT
Actuals in M INR Estimates in M INR
Fiscal
Period March
2017 2018 2019 2020 (e) 2021 (e) 2022 (e)
Sales 318 900 345 250 382 240 419 208 479 984 543 987
EBITDA 60 470 72 760 86 370 100 487 116 718 135 883
Operating
profit (EBIT)
56 510 67 980 81 130 93 362 108 472 126 240
Pre-Tax
Profit (EBT)
63 960 72 850 85 220 100 278 116 664 136 035
Net income 44 900 52 370 60 360 69 964 81 435 93 664
P/E ratio 44,0x 55,5x 61,2x 57,3x 49,4x 43,5x
EPS ( INR ) 20,7 24,1 27,9 32,3 37,4 42,5
Dividend per
Share ( INR )
17,0 20,0 22,0 25,8 30,5 35,0
Yield 1,86% 1,50% 1,29% 1,40% 1,65% 1,89%
HINDUNILVR
22nd AUGUST 19

7. 6
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HINDUNILVR
22nd AUGUST 19