Emkay Global Financial Services has recommended hold rating on Hindustan Unilever (HUL) with a target of Rs 347, in its October 31, 2011 research report.
“Hindustan Unilever (HUL), results beat our expectations - Sales growth of 17.8% to Rs 56bn driven by 9.8% volume growth and APAT growth of 21.7% to Rs 6.9bn. Soaps and detergents outshine - revenue growth of 21.8% with PBIT margin expansion of 60bps yoy and 320bps qoq - this catalyst played out earlier than expected. We believe all the upgrade catalysts have played out and do not see further catalysts in the near term. At CMP, we feel there is limited upside left, if any. While we raise our FY12E/13E EPS by 5.9% to Rs 11.8 and by 5.6% to Rs 13.3, respectively.”
“HUL’s Q2FY12 performance beats our estimates - Sales growth of 17.8% yoy to Rs 56 bn is aided by 9.8% overall volume growth and robust growth in soaps and detergents segment. While input costs continued to put pressure on a yoy basis, efficient cost management and lower A&P (11.6% in 2QFY12 vs. 13.6% in 2QFY11) resulted in 120 bps expansion in EBTIDA margins to 14.7%. Adjusted PAT registered growth of 22.6% yoy to Rs 6.5 bn against our expectation of Rs 5.5 bn. Soaps and detergents segment reported a stellar performance with 21.8% yoy sales growth to Rs 26 bn. This revenue growth has been primarily driven by the laundry segment led by double-digit growth in Rin, Surf and Wheel. Lux and Lifebuoy also registered healthy growth. PBIT margins expanded 60bps yoy and 320 bps qoq driven by higher realizations and lower A&P in this segment. With this catalyst being played out earlier than expected, we revise our EBITDA estimates upwards by 7.9% for FY12E and 7.5% for FY13E. Accordingly, our EPS stands revised to Rs 11.8/share (+5.9%) for FY12E and Rs 13.3/share (+5.6%) for FY13E.”
“We had anticipated incremental margin delta in the soaps and detergents segment (ref: Report - Holding Fort, Slipping Realm dated September 15, 2011). However, this catalyst played out a quarter earlier. Hence, we raise our earnings estimates by 5.9% to Rs 11.8//share for FY12E and 5.6% to Rs 13.3/share for FY13E. We do not foresee further tailwinds in its business operations from either volume or margin catalysts. Moreover, at the CMP of Rs 375 and valuations of 28x FY13E EPS, we believe potential upsides are capped. Hence, while we raise our earnings estimates, we downgrade our rating on the stock to HOLD from ACCUMULATE with a revised target price of Rs 347/share (revised from Rs 328/share.),” says Emkay Global Financial Services research report.
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“Hindustan Unilever (HUL), results beat our expectations - Sales growth of 17.8% to Rs 56bn driven by 9.8% volume growth and APAT growth of 21.7% to Rs 6.9bn. Soaps and detergents outshine - revenue growth of 21.8% with PBIT margin expansion of 60bps yoy and 320bps qoq - this catalyst played out earlier than expected. We believe all the upgrade catalysts have played out and do not see further catalysts in the near term. At CMP, we feel there is limited upside left, if any. While we raise our FY12E/13E EPS by 5.9% to Rs 11.8 and by 5.6% to Rs 13.3, respectively.”
“HUL’s Q2FY12 performance beats our estimates - Sales growth of 17.8% yoy to Rs 56 bn is aided by 9.8% overall volume growth and robust growth in soaps and detergents segment. While input costs continued to put pressure on a yoy basis, efficient cost management and lower A&P (11.6% in 2QFY12 vs. 13.6% in 2QFY11) resulted in 120 bps expansion in EBTIDA margins to 14.7%. Adjusted PAT registered growth of 22.6% yoy to Rs 6.5 bn against our expectation of Rs 5.5 bn. Soaps and detergents segment reported a stellar performance with 21.8% yoy sales growth to Rs 26 bn. This revenue growth has been primarily driven by the laundry segment led by double-digit growth in Rin, Surf and Wheel. Lux and Lifebuoy also registered healthy growth. PBIT margins expanded 60bps yoy and 320 bps qoq driven by higher realizations and lower A&P in this segment. With this catalyst being played out earlier than expected, we revise our EBITDA estimates upwards by 7.9% for FY12E and 7.5% for FY13E. Accordingly, our EPS stands revised to Rs 11.8/share (+5.9%) for FY12E and Rs 13.3/share (+5.6%) for FY13E.”
“We had anticipated incremental margin delta in the soaps and detergents segment (ref: Report - Holding Fort, Slipping Realm dated September 15, 2011). However, this catalyst played out a quarter earlier. Hence, we raise our earnings estimates by 5.9% to Rs 11.8//share for FY12E and 5.6% to Rs 13.3/share for FY13E. We do not foresee further tailwinds in its business operations from either volume or margin catalysts. Moreover, at the CMP of Rs 375 and valuations of 28x FY13E EPS, we believe potential upsides are capped. Hence, while we raise our earnings estimates, we downgrade our rating on the stock to HOLD from ACCUMULATE with a revised target price of Rs 347/share (revised from Rs 328/share.),” says Emkay Global Financial Services research report.
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