Top Indian Companies: Hindustan Unilever Limited

Hindustan Unilever Limited (HUL) is the India’s largest FMCG company. It is a subsidiary of Unilever, a British company. Its products include foods, beverages, cleaning agents, personal care products, water purifiers and other fast-moving consumer goods.

It is part of Nifty 50 index with a weightage of 3.47% in the index. As of February 2022 Hindustan Unilever has a market cap of $70.98 Billion. This makes Hindustan Unilever the world's 233th most valuable company by market cap.

Brief History

HUL was established in 1931 as Hindustan Vanaspati Manufacturing Co. and following a merger of constituent groups in 1956, it was renamed Hindustan Lever Limited. The company was renamed in June 2007 as Hindustan Unilever Limited.

As of 2019, Hindustan Unilever's portfolio had 44 product brands in 14 categories. The company has 18,000 employees and clocked sales of ₹34,619 crores in FY2017–18.

In December 2018, HUL announced its acquisition of GlaxoSmithkline's India's consumer business for $3.8 billion in an all equity merger deal with a 1:4.39 ratio.

Hindustan Unilever's corporate headquarters is located at Andheri, Mumbai.

Shareholding Pattern

Holder's Name No of Shares % Share Holding

No Of Shares 2349591262 100%

Foreign Institutions 345530532 14.71%

Banks/Mutual Funds 76064611 3.24%

Others 28032598 1.19%

General Public 266481760 11.34%

Financial Institutions 179068883 7.62%

Foreign Promoter 1454412858 61.9%

Brands and Products

HUL is the market leader in Indian consumer products with presence in over 20 consumer categories such as soaps, tea, detergents and shampoos amongst others with over 700 million Indian consumers using its products.

Food

• Annapurna salt and Atta (formerly known as Kissan Annapurna)

• Bru coffee

• Brooke Bond (3 Roses, Taj Mahal, Taaza, Red Label) tea

• Kissan squashes, ketchups, juices and jams

• Lipton ice tea

• Knorr soups & meal makers and soupy noodles

• Kwality Wall's frozen dessert

• Magnum (ice cream)

• Horlicks (Health Drink)

* Homecare

• Active Wheel detergent

• Cif Cream Cleaner

• Comfort fabric softeners

• Domex disinfectant/toilet cleaner

• Rin detergents and bleach

• Sunlight detergent and colour care

• Surf Excel detergent and gentle wash

• Vim dishwash

• Magic – Water Saver

Personal care

• Aviance Beauty Solutions

• Axe deodorant and aftershaving lotion and soap

• LEVER Ayush Therapy ayurvedic health care and personal care products

• International breeze

• Brylcreem hair cream and hair gel

• Clear anti-dandruff hair products

• Clinic Plus shampoo and oil

• Close Up toothpaste

• Dove skin cleansing & hair care range: bar, lotions, creams and anti-perspirant deodorants

• Denim shaving products

• Glow and Lovely, skin lightening cream

• Hamam

• Indulekha ayurvedic hair oil

• Lakmé beauty products and salons

• Lifebuoy soaps and handwash range

• Liril 2000 soap

• Lux soap, body wash and deodorant

• Pears soap, body wash

• Pepsodent toothpaste

• Pond's talcs and creams

• Rexona

• Sunsilk shampoo

• Sure anti-perspirant

• Vaseline petroleum jelly, skin care lotions

• TRESemmé

• TIGI

* Water purifier

• Pureit

FY2023 Q4 Results and Full year Results

HUL reported an increase of 12.74 per cent in its consolidated net profit at Rs 2,601 crore for the fourth quarter ended March 31, 2023, led by underlying volume growth and improvement in margins.

The company had posted a net profit of Rs 2,307 crore in the January-March quarter of the previous fiscal.

Its net sales during the quarter under review stood at Rs 14,926 crore, up 10.83 per cent, as against Rs 13,468 crore in the corresponding period a year ago, Hindustan Unilever Ltd (HUL) said in a regulatory filing.

"HUL delivered strong performance with turnover growth of 11 per cent and underlying volume growth of 4 per cent. Growth was competitive with more than 75 per cent of the business winning market shares," HUL said in its earnings statement.

HUL's total expenses were at Rs 11,961 crore in Q4/FY23, as against Rs 10,782 crore.

"Gross margin improved 120 bps... with a reduction in price vs. cost gap. We continued to invest competitively behind our brands and stepped-up A&P investments by 80 bps... EBITDA margin at 23.7 per cent remains healthy," it said.

The total income of HUL in the March quarter, including - sales, service and other operating revenue, was at Rs 15,375 crore.

In the March quarter, HUL's home care segment delivered "solid performance" with 18.84 per cent revenue growth to Rs 5,637 crore. It was at Rs 4,743 crore in Q4/FY22.

"Both Fabric Wash and Household Care grew in strong double digits. The premium portfolio continued to outperform driven by effective market development actions," said HUL.

Similarly, its revenue from Beauty & Personal Care was up 10.83 per cent to Rs 5,257 crore. It was at Rs 4,743 crore a year ago.

The double-digit growth in Beauty & Personal Care was led by a broad-based performance across categories.

"Skin Cleansing delivered double-digit growth led by Lux. With softening in Palm Oil, further price reductions were taken in the soaps portfolio. Hair Care continued its strong competitive performance and delivered volume-led mid-single digit growth," it said.

Skin Care grew in double digits led by strong performance in the premium portfolio.

"Further progress was made on portfolio transformation through innovations and entry into fast-growing demand spaces. A new Skin Care brand 'Novology' in the masstige beauty segment, the new range of Hair Care products by Dove and Tresemme, a bathing range by Lux, and Lakme's Lip and Face mousse were launched in the quarter," it said.

In the Foods & Refreshment, HUL's revenue in the March quarter was up 2.59 per cent to Rs 3,794 crore as against Rs 3,698 crore of the corresponding period.

The growth was led by Foods, Coffee and Health Food Drinks (HFD). Tea strengthened its value and volume market leadership.

"Tea category witnessed consumers downgrading due to higher inflation in premium teas vis-à-vis loose tea. HFD continues to grow competitively and gain penetration. Coffee delivered double-digit growth. Ice Cream grew in mid-single digit with unseasonal rains impacting consumption," it said.

Foods grew in the mid-single digit led by strong performance in Ketchup and Foods Solutions.

However, HUL's revenue from another segment, which includes exports, consignment etc was down 9.6 per cent to Rs 527 crore in the January-March period.

HUL's consolidated net profit was up 14.06 per cent to Rs 10,143 crore for the financial year ended March 31, 2023. It was at Rs 8,892 in FY22.

Similarly, its revenue from operations was at Rs 59,443 crore, up 15.49 per cent. It was at Rs 51,472 crore a year earlier.

“Growth was significantly ahead of the market leading to handsome market share gains. EBITDA margin remained healthy at 23.4 per cent despite the unprecedented inflation during the year,” it said.

"In challenging circumstances of geopolitical uncertainties, high commodity inflation and tepid market growths, I am pleased that we have delivered yet another year of strong and resilient performance.

"We have added around Rs 8,000 crores to our topline in this fiscal with volume growth in mid-single digits despite a decline in FMCG market volumes," HUL CEO and Managing Director Sanjiv Mehta said.

The board of HUL also recommended a final dividend of Rs 22 for the financial year ended March 31, 2023, on Equity Shares of Re 1 each.

Shares of HUL on Thursday were trading at Rs 2470.05 on BSE, down 1.38 per cent from the previous close.

Brokerage outlook

ICICI Securities said: We cut our earnings estimates by ~2% for FY22-23E; modelling revenue / EBITDA / PAT CAGR of 12 / 14 / 14 (%) over FY2021-24E. Maintain ADD rating with DCF-based revised target price of Rs2,500 (earlier was Rs2,600). Key downside risks are delayed recovery in demand, sustained raw material inflation and irrational competition.

ESG and Sustainability

In the last ten years, our Unilever Sustainable Living Plan (USLP) journey has been a learning curve for the business. While the USLP draws to a close, our journey towards making sustainable living commonplace continues. The Unilever Compass is our new fully integrated corporate strategy that builds on USLP and lays the pathway for our Vision. HUF supports grassroots level interventions in 11,500 villages across 59 districts in 10 states and 2 union territories with 19 NGO partners.