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Hindustan Unilever 4QFY2014 performance highlights and results update

May 5, 2014, Monday, 12:55 GMT | 07:55 EST | 16:25 IST | 18:55 SGT
Contributed by Angel Broking

For 4QFY2014, Hindustan Unilever (HUL)’s performance was below our estimates. The company posted a 7% yoy growth in its recurring PAT to Rs.832cr. We remain Neutral on the stock.

Key highlights during the quarter: For 4QFY2014 HUL’s top-line rose by 8.9% yoy to Rs.6,936cr. The domestic consumer business rose by 9% yoy with a volume growth of 3% yoy. The soaps and detergents division posted a growth of 9.6% yoy aided by price hikes in the skin cleansing segment and healthy growth in premium products in the laundry segment. The personal products division posted a modest 8.3% yoy growth, impacted by a weak performance of the oral care segment as high promotional intensity in the market affected the sales of Pepsodent. The beverages division posted a growth of 7.5% aided by double digit growth in the tea business. The OPM (excl. other operating income) fell by 46bp yoy to 13.3% due to increase in staff costs and other expenses. During the quarter the company had exceptional income of Rs.66cr, arising out of sale of properties and reduction in provision for retirement benefits. After adjusting for the exceptional income, the company’s net profit rose by a modest 7% yoy to Rs.832cr.

Outlook and valuation: We expect HUL to post an ~12.9% and ~9.3% CAGR in its top-line and bottom-line respectively, over FY2014-16E. At the current market price, the stock is trading at 28x FY2016E earnings. We maintain our Neutral view on the stock.