Friday, July 26, 2013

HUL Q1 FY 2014 Result Analysis

Hindustan Unilever (HUL) reported average set of numbers for the first quarter of current financial year with tepid volume growth of just 4% YOY. Net profit reported for the quarter was at Rs.1,019 crores on revenues of Rs.6,687.49 crores against net profit of Rs.1331.19 crores on revenues of Rs.6,250.15 crore in the corresponding quarter last year.

Year on Year the net profit has fallen 23% while revenues have gone up 7%. For FY-14, HUL is expected to generate around Rs.28000 crores of revenue and Net profit of Rs.4000 crores, against revenue of Rs.26317 crores and Net profit of Rs.3829 crores in FY-13.

At current market price of Rs 660 the company commands a market value of 1.43 Lakh Crores and a PE multiple of 36 times based on FY-14 expected Net Profits. 

The FMCG market is slowing down in India and the company is not expected to grow at the rate of more than 15% for next couple of years. Under such environment 36 times PE multiple and 5 times price to sales seems to high for the stock. Moreover the stock has already gone up more than 43 percent from Rs.460 to Rs.660 in past 3 months and has added more than 40,000 crores to it's market value.

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