Hindustan Unilever Ltd on Buyers List Now

Hindustan Unilever Ltd or HUL as it is known amongst the market men, has done pretty well for itself for the quarter ended 30th September 2008. And the coming months are expected to be better as prices of one of its main raw material – palm oil is at two year low levels. This is expected to bring down the operating costs and thus improve the margins. With inflation at 8.40%, the company might soon be forced to bring down the costs of some of its products and this in turn is expected to give a boost to demand. So the fall in realization would be more than made up by higher volumes.

For the September quarter, the net sales of the company grew 20% and volume grew by 7%. Profit before Interest, Tax and Exceptional Items grew 17% while PAT after exceptional items grew by 32%.

Laundry category continued robust growth across all three brands - Surf, Rin and Wheel. Growth in Personal Wash was mostly price led with Lux and Lifebuoy leading category growth. Shampoo category maintained growth due to the newly introduced Dove improving market share. Oral category growth was led by Close up. Some of the innovation during this quarter were Lux almond and cream, Rin matic, Clinic All Clear –soft & shiny, Axe – dark temptations and Close Up was relaunched. Foods business grew by 17.5%. PureIt, its mineral water has now got a reach of 600 towns.

Investment behind brands and new categories were sustained during the quarter, growing 14%. PBIT grew 16.9% and PBIT margin for the quarter at 12.9% of Sales, was 30 bps below September quarter2007, entirely from Soaps and Detergents, which suffered the maximum cost escalation. Profit after Tax (PAT) from ordinary activities grew by 32% and Net Profit grew by 34%, due to exceptional income from profit on sale of properties.

In the coming months, the slowdown in the economy could have a marginal impact as buying in some categories, especially the high-end would see some fall. Yet, it might be able to offset the slowdown with price cuts and lower operating costs.
HUL has once again caught the fancy of the investors and continues to remain high on the buyers list.