Hindustan Unilever
BSE SENSEX
51,937
S&P CNX
15,583
31 May 2021
Annual Report Update | Sector: Consumer
CMP: INR2,341
TP: INR2,780 (+19%)
Treading on the path to sustainable growth
Buy
We present some key points from Hindustan Unilever (HUVR)’s FY21 Annual Report:
Stock Info
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
HUVR IN
2,350
5501.2 / 75.8
2504 / 2001
-7/-8/-46
5618
38.1
Financials Snapshot (INR b)
Y/E Mar
2021 2022E 2023E
Sales
Sales Gr. (%)
EBITDA
Margins (%)
Adj. PAT
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh.(INR)
Ratios
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
67.3
11.6
48.2
1.7
59.2
11.6
41.6
1.7
48.3
11.5
35.3
2.0
29.5
39.0
116.3
19.6
26.6
98.6
23.9
32.1
98.1
460
18.6
113
24.6
82
34.8
11.5
201.8
504
9.5
131
26.0
93
39.5
13.6
202.4
577
14.6
154
26.7
114
48.4
22.5
203.3
Shareholding pattern (%)
As On
Promoter
DII
FII
Others
Mar-21 Dec-20 Mar-20
61.9
10.7
15.0
12.5
61.9
10.7
14.9
12.5
67.2
6.7
12.1
14.1
FII Includes depository receipts
Gaining market share:
HUVR now has 14 brands with over INR10b in annual
sales (v/s 12 brands last year). In FY21, it gained market share in 84% of its
portfolio and launched more than 150 SKUs.
Rapid technology adoption:
A significant leap has been observed in technology
adoption among small retailers, which are convinced that this is, indeed, the
need of the hour. HUVR’s eB2B app, ‘Shikhar’, has enabled its retailer partners
to place contactless orders conveniently, with over 500k retailers ordering
through the app. We reckon that while this accounts for ~20% of HUVR’s direct
reach and ~6% of the total reach, the proportion of sales would be higher.
HUVR is looking to scale up the app, while continuing to work at the backend to
build next-day delivery systems. The company has partnered with the State
Bank of India to resolve the liquidity issues of small retailers, thus helping build
stronger channel relationships. HUVR continues to empower Shakti
entrepreneurs and now has a network of nearly 136k spanning 18
states/territories in India ensuring strong growth in a volatile supply chain
environment.
Strengthening e-commerce presence:
Online sales have emerged as a key
growth channel, and this growth is likely to sustain post the pandemic as well. As
a result, the company is focusing on replicating the concept of the ‘perfect store’,
successfully applied to its brick-and-mortar stores, in its e-commerce sales as
well. The move to build the perfect online store and drive everyday great
execution has ensured the best-in-class online availability and discoverability of
its products. E-Commerce-focused innovations include smart packaging solutions
and the right pack price architecture to suit last-mile logistics.
Boosting GSKCH sales:
FY21 marked the first year of its merger with the
GlaxoSmithKline Consumer Healthcare Limited (GSKCH) business in India. With
low penetration levels, the Health Food Drinks (HFD) category offers huge
headroom for growth. The Annual Report highlights HUVR has clear strategies
in place to drive growth, such as (a) improving accessibility and reach, (b)
landing impactful innovations, (c) increasing profitability through synergies,
and (d) investing in brands. To make Horlicks and Boost more accessible to
consumers, HUVR introduced new pouch packs and INR2 sachets in FY21.
Significant expansion was also seen in Boost’s distribution across India.
Extending premiumization to segments beyond detergents:
Notably, from a
premiumization perspective, rapidly increasing sales of dishwashers in India (as
indicated in the Annual Report) could be a game-changer, driving the shift from
a) powder to liquid dishwashing products, and b) beyond that to Vim’s
premium ‘Matic’ range of products. This, we note, is in addition to the ongoing
spurt and premiumization in the even larger Personal Wash category. HUVR
has seen significant premiumization in Detergents in the last 6–7 years, which
may potentially be observed in the Dishwashing and Personal Wash segments
as well.
Krishnan Sambamoorthy – Research Analyst
(Krishnan.Sambamoorthy@MotilalOswal.com)
Research Analyst:
Dhairya Dhruv
(Dhairya.Dhruv@MotilalOswal.com)
/
Kaiwan Jal Olia
(kaiwan.o@motilaloswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
Hindustan Unilever
Stock Performance (1-year)
Valuation and view
The company continues to place building blocks for future growth and has been
able to do so ahead of peers. It continues to display the dexterity shown over
the last decade despite its larger size, even as it continues to grow v/s peers.
HUVR continues to strengthen the key drivers of its success in India over the last
decade, including (a) pioneering the use of technology to generate data and
facilitate decision making, (b) the Winning in Many Indias (WiMI) strategy,
focused on decentralization and localized strategies, (c) recognizing trends and
investing in them early on, (d) funneling cost savings back into the business, and
(e) its strong execution ability, which has led to a positive earnings momentum.
The company’s earnings growth has gained further impetus in recent years
(before COVID-19 affected FY21) – it reported a ~18% EPS CAGR in the four
years ended FY20 v/s a ~12% CAGR over FY10–20. This is particularly impressive
given the weak mid-single-digit earnings growth posted by (much smaller) peers
in recent years.
After premiumization in Detergents led to strong growth in detergent sales and
margins in the last decade, the Personal Wash and Dishwashing segments show
considerable promise going forward. The high-margin Discretionary portfolio
was under pressure in FY21 – resulting in lower than the usual 12% adjusted EPS
growth) – and is expected to face significant pressure in FY22 as well (albeit less
than in the previous year). Nevertheless, the trajectory of premiumization over
the medium term is evident. Additionally, synergies from the GSKCH business
would play a big role in the resumption of strong earnings growth going
forward.
There is no material change in our forecasts. We maintain a
Buy
rating, with
unchanged TP of INR2,780 (55x Jun’23E EPS).
31 May 2021
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Hindustan Unilever
Annual Report highlights
Steps to achieve technological edge, support channel partners
The events of 2020 have fast-forwarded the shift towards digital ordering and
fulfillment. Small retail stores are now more convinced about adopting
technology and are looking to HUVR to provide digital solutions. HUVR’s true
prowess in technology and data-driven decision-making has been extremely
useful during the pandemic – when digital journeys have managed to mitigate
many of the challenges faced due to physical restrictions amid strict lockdowns
in India.
HUVR’s eB2B app, Shikhar, has enabled its retailer partners to place contactless
orders conveniently, with over 500k retailers now ordering through the app.
This is significant as it already constitutes 6.3% of HUVR’s massive reach of 8m
outlets. Moreover, while in terms of numbers these outlets account for 6.3% of
the total reach (we reckon this is 20% of its direct reach of 3m outlets), from a
sales perspective, the proportion is likely to be much higher.
Shikhar enables hundreds of thousands of retailers to place contactless orders
safely and provides them visibility on the fulfillment of these orders through
logistic tie-ups and intuitive interfaces. It allows retailers to place orders at their
convenience without waiting for the salesmen to visit their stores. HUVR is
looking to scale up the app, while continuing to work at the backend to build
next-day delivery systems.
In a bid to further its journey to create a digital customer ecosystem of
connected stores, HUVR piloted ‘Samadhan’, a direct-to-trade order-fulfillment
platform in Chennai. ‘Samadhan’ is fully integrated with a digital order capturing
platform and aims to deliver speedier and more reliable services to retail outlets
through warehouse automation and optimized last-mile logistics.
The company has also tied up with State Bank of India to resolve the liquidity
issues of small retailers.
The Shakti program, now with nearly 136k Shakti entrepreneurs, has also been
an important growth driver in the current disruptive times.
To prepare its end-to-end value chain for technology-led consumption models,
the company is investing significantly in its digital transformation program –
‘Reimagine HUL’. The steering committee for this initiative is a digital council
comprising cross-functional leaders.
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Hindustan Unilever
Exhibit 1: Enhanced agility and responsiveness with the aid of technology
Source: Company, MOFSL
Adapting to a changing shopping world
Channeling the robust WiMI strategy, HUVR has pinpointed the demand shift
induced by reverse migration, the revival of neighborhood stores, and the
expansion of e-commerce.
HUVR has maximized growth by prioritizing these focus areas and ramped up
the availability of products and brand presence across categories and population
strata.
The rural economy has been a growth driver. HUVR is empowering Shakti
entrepreneurs and now has a network of nearly 136k entrepreneurs spanning
18 states/territories in India.
Exhibit 2: Adaptability to consumer trends
Big brands are those with an annual turnover > INR10b
* Excludes the impact of merger of GSKCH and acquisition of VWash
Source: Company, MOFSL
31 May 2021
4
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Hindustan Unilever
Winning in channels of the future (e-commerce-focused
initiatives)
E-Commerce has gained unprecedented relevance due to the ongoing pandemic
and has been the go-to channel for many of HUVR’s consumers amid the
physical lockdowns. HUVR has set up the Premium Beauty Business Unit within
Beauty & Personal Care to strengthen its play in the ‘Mass-tige’ Beauty segment.
The unit would work closely with the e-commerce sales team and lead the entry
into niche premium formats – such as serums, sheet masks, hair masks, etc. –
through existing and new brands.
The management expects technology-driven commerce to continue to grow
disproportionately; therefore, it aims to invest in this ahead of the curve. With
new channels, benefit segments, and brands, the company is also focusing on
new marketing models to take innovation and activation to consumers.
The company is focusing on replicating the concept of the ‘perfect store’,
successfully applied to its brick-and-mortar stores, in its e-commerce sales as
well. The move to build the perfect store online and drive everyday great
execution has ensured the best-in-class online availability and discoverability of
its products.
E-Commerce-focused innovations include smart packaging solutions and the
right pack price architecture to suit last-mile logistics. The right portfolio for e-
commerce is also supported by operations built for this channel – from demand-
anticipating algorithms to fast order fulfilment – and the company is turning
more agile in terms of its supply chain and operations.
While the pandemic has impacted HUVR’s Color Cosmetics and Deodorants
categories, it has also presented the opportunity to leverage technology to get
closer to consumers. The Lakmé Direct to Consumer (D2C) site
(www.lakmeindia.com) is an example of the company’s agility and intent to
continue to drive growth.
In the Home Care segment, HUVR believes it has a strong portfolio of products
with the right pack price architecture, exclusively designed for the e-commerce
and MT channels. For example, the Surf Excel Matic value pack offers value to
the consumers and is economically viable from a last-mile delivery perspective.
The company is also using the e-commerce channel to drive new benefit
segments and new formats (such as the Vim Matic Dishwash range), and is
seeding e-commerce-first brands such as Nature Protect to expand the portfolio
in this channel.
Foods business doing well, with GSKCH poised for growth
Over 2020–21, HUVR gained significantly in terms of market share as well as
household penetration in its Tea business.
In the Coffee category, HUVR continued its good performance and launched a
natural variant of its brand ‘BRU Veda’.
FY21 was the first year of the merger with the GSCKCH business in India. With
low penetration levels, the HFD category offers huge headroom for growth.
There are clear strategies in place to drive growth, such as improving
accessibility and reach, landing impactful innovations, increasing profitability
through synergies, and investing in the brands.
31 May 2021
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Hindustan Unilever
To make Horlicks and Boost more accessible to consumers, HUVR introduced
new pouch packs and INR2 sachets for both these brands in FY21.
Significant expansion was also seen in Boost’s distribution across India.
Horlicks was relaunched with added zinc, which is known to boost immunity.
The Horlicks Plus range was also relaunched, marking HUVR’s entry into the High
Sciences space of Nutrition.
HUVR seamlessly executed one of the largest FMCG acquisitions in India
virtually, amid lockdowns in the country. Through the merger, the company
successfully integrated a large base of vendors and on-boarded distributors. Its
go-to-market plan has been designed to ensure the combined strength of the
erstwhile GSKCH and HUVR is leveraged in the marketplace.
During the year, the company also completed the integration of the acquired
business into the ‘HUL SAP-ERP’ platform.
Exhibit 3: Smooth integration driving strong performance
Source: Company, MOFSL
Key segmental highlights
A) Beauty & Personal Care (BPC): COVID boosts Skin Care, but impacts other
categories
Leveraging the WIMI strategy, HUVR was able to offer an extensive portfolio, with
products tailored to specific regional preferences. COVID-19 had a varied impact on
the segment, with some categories such as Skin Cleansing (especially Hand Hygiene)
getting a boost, while others (including Skin Care, Color Cosmetics, and Deodorants)
seeing sharp decline YoY – due to people being homebound.
FY17
163.0
1.8
47.3
38.5
1.2
23.6
64.9
FY18
164.6
1.0
46.8
41.6
8.1
25.3
60.9
FY19
176.6
7.2
46.2
46.9
12.6
26.5
58.0
Exhibit 4: Beauty & Personal Care performance
Particulars (INR b)
Beauty & Personal Care revenue
YoY growth (%)
Contribution to total turnover (%)
Beauty & Personal Care EBIT
YoY growth (%)
Margins (%)
Beauty & Personal Care contribution to total EBIT (%)
FY20
FY21
173.5
179.6
(1.8)
3.6
44.7
39.1
48.7
51.3
3.9
5.3
28.1
28.5
56.2
49.7
Source: Company, MOFSL
31 May 2021
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Hindustan Unilever
HUVR swiftly pivoted to service consumers’ needs by expanding its range of hygiene
products, focused on supplying essential products, drove relevant innovation
designed for channels such as e-commerce, and communicated with contextually
relevant messaging.
1)
Hair Care:
HUVR continued to focus on core brands, driving salience with
impactful communication. At the same time, it kept innovating to meet evolving
consumer needs. TRESemmé launched its “Salon at Home” campaign,
addressing the beauty-at-home trend. HUVR introduced a sulfate-free range and
new offerings in serums and masks. Dove launched a new campaign highlighting
its proposition on hair damage repair.
2)
Oral Care:
Closeup delivered highly relevant in-home contextual messaging
during the lockdown, in line with the brand’s message to uphold good oral
hygiene.
3)
Progress on the Naturals play:
While Lever Ayush, the master brand, maintained focus on its key market in
southern India, HUVR continued to build specialist brands such as Indulekha
and Hamam.
It expanded the Indulekha franchise with the launch of a new variant –
Indulekha Neemraj Oil and Shampoo.
It also introduced one of Unilever’s global Naturals segment brands ‘Love
Beauty and Planet’ in India.
The third leg of the company’s strategy in this segment involved natural
variants of existing brands, such as TRESemmé Botanique, Glow & Lovely
Ayurvedic Care, Lifebuoy Neem and Turmeric, Pears Naturale, etc.
4)
New launches:
(1) Lifebuoy launched 15 new SKUs in the Hand Hygiene portfolio
to ensure the accessibility and availability of products. (2) LUX was re-launched
with a superior product formulation. (3) Indulekha Neemraj Oil and Shampoo, a
new variant, was also launched.
The Home Care business’ relevance increased in the wake of COVID-19 with people
spending more time in their homes. The categories within this segment were also a
mixed bag – categories such as Dishwashing and Surface Cleaning did well, while
Laundry, the largest segment in the category, was impacted due to reduced usage.
Exhibit 5: Home Care performance
B) Home Care: Increased relevance due to consumers being homebound
Particulars (INR b)
Home care revenue
YoY growth (%)
Contribution to total turnover (%)
Home care EBIT
YoY growth (%)
Margins (%)
Home care contribution to total EBIT (%)
FY17
113.5
4.9
32.9
12.6
19.6
11.1
21.2
FY18
116.3
2.5
33.0
17.0
34.7
14.6
24.8
FY19
128.8
10.7
33.7
21.6
27.6
16.8
26.8
FY20
136.4
5.9
35.2
25.6
18.3
18.8
26.6
FY21
139.6
2.3
30.3
27.7
8.3
19.9
26.9
Source: Company, MOFSL
1)
Fabric Wash:
Fabric cleaning became less frequent during the year due to
reduced mobility. Reverse migration and a drop in income levels resulted in
downtrading. Surf launched ‘Surf Excel Active Hygiene’ to provide consumers a
germ-free wash for their clothes. HUVR also launched its first Home Care
31 May 2021
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 Motilal Oswal Financial Services
Hindustan Unilever
2)
3)
4)
5)
product under the Lifebuoy brand, ‘Lifebuoy Laundry Sanitiser’, and stepped up
its focus on anti-bacterial variants of Rin and Comfort. Surf Excel introduced a
smart spray with stain lifting technology. The premium portfolios of Liquid
Detergents and Fabric Conditioners proved to be more resilient, delivering
strong performance and driving premiumization.
Dishwashing:
The Dishwashing portfolio benefitted from the in-home cooking
trend. The premiumization opportunity continues to be strong and HUVR is well-
placed to lead this trend. Vim Liquid pioneered the format upgrade in the
country through its large-scale direct contact program. Vim launched anti-
bacterial variants of dishwash bars and liquids. It also launched the Vim Matic
range targeting dishwasher users.
Floor cleaners:
A new Domex variant was launched with a formulation
containing sodium hypochlorite, proven to destroy the Coronavirus in 60
seconds. Domex also rolled out a surface cleaner spray and wipes to extend the
brand usage.
Nature Protect
– HUVR launched Nature Protect targeting soft hygiene needs
with its neem-based portfolio comprising surface cleaners, laundry, fruit-and-
veggie cleaners, and an on-the-go cleaner.
Life Essentials:
This category faced severe disruption in the first half of the year
as a result of the lockdown. However, in the second half of the year, the Water
Purifier business gained momentum to win consumers through value-added
innovations and channel-differentiating products in e-commerce.
C) Foods & Refreshment: Displays resilience and strength
HUVR focused on providing healthy in-home eating options through its portfolio of
brands.
Exhibit 6: Food & Refreshments performance
Particulars (INR b)
Foods & Refreshment revenue
YoY growth (%)
Contribution to total turnover (%)
Foods & Refreshment EBIT
YoY growth (%)
Margins (%)
Foods & Refreshment contribution to total EBIT (%)
FY17
59.7
7.1
17.3
8.4
6.3
14.1
14.2
FY18
64.9
8.6
18.4
9.9
17.4
15.2
14.4
FY19
71.3
10.0
18.7
12.4
25.4
17.3
15.3
FY20
74.5
4.4
19.2
12.3
(0.3)
16.5
14.2
FY21
132.0
77.2
28.7
21.9
77.7
16.6
21.2
Source: Company, MOFSL
1)
Foods:
The category, consisting of soups, types of ketchup, sauces, and noodles,
performed well, riding on in-home consumption trends. HUVR launched Kissan
Peanut Butter made from 100% real peanuts – an excellent source of protein
and zinc.
2)
Refreshments
– The Tea business posted significant gains in terms of market
share as well as household penetration. Tea prices saw unprecedented inflation
on account of the loss of tea crop due to COVID-induced lockdowns and a
natural calamity in India’s eastern region. HUVR took price increases to partly
offset this inflation. In Coffee, it launched a natural variant of the brand ‘BRU
Veda’.
3)
Out-of-Home Portfolio
– The category – comprising Ice Cream and the Unilever
Food Solutions professional business, which caters to institutional buyers such
31 May 2021
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 Motilal Oswal Financial Services
Hindustan Unilever
as hotels and offices – saw a challenging year on account of lockdowns. HUVR
collaborated with last-mile delivery partners such as Swiggy and Zomato to
provide home-delivery solutions for ice creams. Sequential recovery was seen as
more people stepped out of their homes in the second half of the year.
4)
Nutrition and the GSKCH acquisition
– HUVR integrated its Nutrition business
with the acquisition of GSKCH. Low category penetration levels offer huge
headroom for growth. The company’s strategies to drive growth in this category
include a) improving accessibility and reach, b) landing impactful innovations, c)
increasing profitability through synergies, and d) investing in the brands. HUVR
introduced new pouch packs and INR2 sachets for Horlicks and Boost to improve
accessibility, while expanding Boost across India. It launched Horlicks with
added zinc, which is known to boost immunity. It relaunched the “Plus” range
under the Horlicks brand, marking its entry into the High Sciences space in the
Nutrition category.
Overall financial performance
~80% of HUVR’s business addressed the consumer needs of Health, Hygiene,
and Nutrition and grew strongly at 12%.
Discretionary categories such as Skin Care, Deodorants, and Color Cosmetics,
forming ~15% of the company’s sales, posted decline of 15% due to pressure on
household budgets and limited mobility.
Out-of-home categories such as Ice Cream and Food Solutions, which contribute
~5% to HUVR’s sales, were disproportionately impacted, thus declining 26%.
Profit-after-tax increased 18% to INR79.5b; cash flow from operations (after
taxes) was up 23% to INR89.6b.
Growth of 23% YoY in OCF was ahead of PAT growth. FCF, on the other hand,
declined 24% on the acquisition of GSKCH’s brand rights worth INR34.2b.
Exhibit 7: Domestic consumer underlying sales growth at 6% (excl. GSKCH) in FY21…
Domestic FMCG sales growth (%)
Source: Company, MOFSL
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Hindustan Unilever
Exhibit 8: …and underlying volumes at 3% YoY (excl. GSKCH)
Underlying volume growth (%)
Source: Company, MOFSL
Exhibit 9: Volume growth (incl. GSKCH) at 16.5% in FY21…
Domestic volume growth (%)
16.5
9.8
6.8
4.0
4.8
5.8
0.8
6.5
2.0
Exhibit 10: …leading to double-digit topline growth
Total Revenue (INR b)
16.7
8.6
9.9
0.8
2.7
8.3
10.7
1.5
Revenue growth (%)
18.6
14.6
9.5
258 280 308 311 319 345 382 388 460 504 577
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 11: HUVR’s – significantly superior reach v/s peers; total reach of 8m outlets
43%
39%
Direct reach as a % of total reach
35%
33%
30%
29%
22%
21%
18%
16%
HUL
BRIT
TGBL
CLGT
NEST
JYOTHY
GCPL
HMN
MRCO
DABUR
Source: Company, MOFSL
Despite a 120bp contraction in HUVR’s gross margin, EBITDA margin contraction
was just 20bp YoY at 24.6%. The margin performance was a result of the strong
savings agenda, scale efficiencies (achieved on the back of healthy volume
growth in some categories), the mix impact given merger of the relatively higher
margin GSKCH business as well as a strong portfolio of premium brands, and
market development efforts. PAT (bei) was up 21.3% to INR81.8b while adjusted
EPS was up 11.5% on account of dilution led by the GSKCH merger.
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Hindustan Unilever
Exhibit 12: FY21 gross margin lower on steep RM inflation in
2HFY21
Gross margin (%)
53.0 53.0
48.8 49.3
50.7 50.8
16.9
15.5 16.0
18.5 19.0
54.1
52.9
53.9 54.5
21.1
22.6
24.8 24.6
Exhibit 13: Efficient cost management helps maintain robust
operating margins
EBITDA Margin (%)
26.0 26.7
47.7
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 14: Margin expansion trajectory to continue after FY21 blip
Y/E March (INR b)
Gross Profit
Gross Margin (%)
Gross margin change – YoY (bps)
EBIDTA
EBITDA Margin (%)
EBITDA margin change – YoY (bps)
FY16
157.6
50.7
140
57.5
18.5
160
FY17
162.1
50.8
10
60.5
19.0
50
FY18
182.9
53.0
220
72.8
21.1
210
FY19
202.6
53.0
0
86.4
22.6
150
FY20
209.9
54.1
110
96.0
24.8
220
FY21
243.2
52.9
-120
113.2
24.6
-20
FY22E
271.6
53.9
100
131.1
26.0
140
FY23E
314.7
54.5
60
153.9
26.7
70
Source: Company, MOFSL
Exhibit 15: Other expenses (incl. A&P) to sales trend over past five years
Companies
HUL
Britannia
Colgate
Dabur
Emami
GCPL
ITC*
Marico
Nestle
P&G Hygiene and Healthcare
FY17
26.8
20.3
32.0
20.5
28.3
24.3
15.6
25.5
25.0
27.0
FY18
FY19
FY20
FY21
26.9
25.8
25.0
23.4
19.2
21.0
20.2
18.8
30.6
30.7
31.3
29.3
19.3
18.2
18.4
18.2
29.5
28.4
28.0
26.4
24.9
24.7
25.1
23.5
14.7
15.0
15.7
16.7
22.0
21.1
22.2
20.1
24.0
24.8
23.9
22.1
31.1
32.9
37.0
39.4
Source: Company, MOFSL, *Estimates for FY21
Exhibit 16: HUVR derives maximum benefit through savings in other expenses (incl. A&P
expense) as percentage of sales post GST (FY18–21)
Savings in other expenses (incl. A&P) as a % of sales (FY18-21)
3.4
3.2
1.9
1.9
1.4
1.3
1.2
0.4
-2.0
-8.3
Source: Company, MOFSL, *Estimates
31 May 2021
11
 Motilal Oswal Financial Services
Hindustan Unilever
Exhibit 17: EBITDA CAGR of 16.6% over FY21–23E
EBITDA (INR b)
21.6
16.4
11.8
10.4
5.2
40
45
52
57
60
73
86
96
113 131 154
32
36
20.3
EBITDA growth (%)
23.9
18.7
11.1
18.0
15.8
17.4
11.5
2.7
37
42
14.2
1.9
42
53
61
67
82
93
114
Exhibit 18: Adj. PAT CAGR of 18% over this period
Adj. PAT (INR b)
24.7
14.7
10.9
Adj. PAT growth (%)
21.3
13.6
22.5
Source: Company, MOFSL
Source: Company, MOFSL
Working capital deteriorated by 6 days YoY (on a year-end basis) and stood at a
negative 29 days. Decline in sales in 1QFY21 was a big factor which affected this
metric. RoE saw a big drop of 56.5 percentage points YoY to 29.5% in FY21 on
account of GSKCH-related goodwill and brand rights costs – which inflated
HUVR’s networth (share premium on consolidation). Growth of 23% YoY in OCF
was ahead of PAT growth. FCF, on the other hand, declined 24% on the
acquisition of GSKCH’s brand rights worth INR34.2b.
Exhibit 20: Brand rights acquisition in FY21 leads to lower
FCF/FCF-to-PAT
FCF to PAT (%)
98.0 95.9
90.3
96.5 96.0
82.3
97.9
61.2
101.1 103.7
Exhibit 19: Consistent OCF and FCF generation
OCF (INR b)
FCF (INR b)
79.2
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 21: Cumulative yield of 87% on CMP of INR237 (1
st
Apr’11)
Cumulative dividend
DPS (INR)
207
17
20
22
25
7
7
18
13
15
15
*Only considered final dividend of INR3.5 in FY10 (Total dividend in FY10 is INR6.5)
Source: Company, MOFSL
31 May 2021
12
 Motilal Oswal Financial Services
Hindustan Unilever
Exhibit 22: HUVR has consistently delivered superior returns to shareholders v/s benchmark indices despite FY21 being an
aberration
Date of
purchase
30-Mar-2012
28-Mar-2013
31-Mar-2014
31-Mar-2015
31-Mar-2016
31-Mar-2017
28-Mar-2018
29-Mar-2019
31-Mar-2020
HUL Share Performance*
(%)
493
422
303
178
180
167
82
42
6
Sensex Performance*
(%)
184
163
121
77
95
67
50
28
68
HUL v/s Sensex
(%)
309
259
182
101
85
100
32
14
-62
Nifty Performance*
(%)
177
159
119
73
90
60
45
26
71
HUL v/s Nifty
(%)
316
263
184
105
90
107
37
16
-65
* Performance v/s 31-Mar-2021Source: Company, MOFSL
31 May 2021
13
 Motilal Oswal Financial Services
Hindustan Unilever
Sustainability
HUVR’s parent Unilever plans to globally invest EUR1b over 10 years in R&D for
new technologies to reduce its carbon footprint, plastic waste, and water use; it
would increase the number of biodegradable and sustainable ingredients
associated with its products.
For instance, it would replace crude oil and other fossil fuels used to make some
of its chemicals with renewable and recycled carbon.
Unilever aims to achieve this through partnerships and cutting-edge innovation
– applying the latest science and biotechnology at scale to create cleaner, more
sustainable products that clean, remove stains, and disinfect at least as well as
conventional products. It aims to continue to deliver superior products that are
better for the planet at affordable costs.
Exhibit 23: Focus on improving consumers’ health as well as the planet
Source: Company, MOFSL
Exhibit 24: HUVR’s delivery on its sustainability plan
Particulars
Reduction in CO2 emissions (kg/tonne of production) in manufacturing operations compared with 2008 baseline
Reduction in water consumption (m3/tonne of production) in manufacturing ops. compared with 2008 baseline
Reduction in total waste (kg/tonne of production) generated from factories compared with 2008 baseline
Better livelihoods – Shakti entrepreneurs empowered (in m)*
Sustainable sourcing – Tea sourced from sustainable sources for Unilever brands
Health and well-being – Reach through water, sanitation, and hygiene (wash) initiatives
2018
59%
55%
58%
0.11
65%
>150m
2021
91%
54%
59%
0.14
67%
>154m
Source: Company, MOFSL
31 May 2021
14
 Motilal Oswal Financial Services
Hindustan Unilever
Highlights of sustainability efforts in India
HUVR successfully reduced CO
2
emissions per tonne of production by 91% (85%
in the previous year) compared with the 2008 baseline.
It has committed to making 100% of its plastic packaging reusable, recyclable, or
compostable by 2025. It is working on reducing plastic pollution through (a)
targeting absolute reduction using more recycled and less virgin plastic, (b)
improving the recyclability of plastic used, and (c) collecting more plastic than it
sells. The company has done significant work in this area – it has collected and
safely disposed of more than 100,000 tonnes of post-consumer-use plastic
waste (in aggregate) since 2018 through collection and disposal partners.
It successfully reduced water consumption by 54% (m
3
/tonne of production) in
manufacturing operations v/s the 2008 baseline. Notably, this is lower than the
58% levels in the previous year, possibly led by the GSKCH manufacturing
integration. Similarly, the total waste (kg/tonne of production) generated from
factories was lower v/s the 2008 baseline – it stood at 59% in the year under
review vis-à-vis 63% in the previous year.
From 2021, HUVR has committed to collecting more plastic than is used in its
packaging.
Along with collection and processing, HUVR is also progressing on making plastic
packaging circular by eliminating unwanted plastics, using post-consumer
recycled plastics (PCR), and recycle-ready structures. It is working alongside
partners such as Banyan Nation for this purpose. The company’s purpose-driven
brands (such as Surf Excel Laundry Liquid, Sunsilk, and TRESemmé) use 25% r-
HDPE (High Density Polyethylene). Vim uses 50% r-PET in its liquid bottles. The
company has eliminated ~1 kilo tonne of plastic by eliminating plastic coatings
from soap cartons (Dove, Lux, and Liril) and Lifebuoy’s soap stiffeners; it has also
moved shampoo sachets, soap wrappers, and Vim bar flow-wraps to the recycle-
ready structure.
Through intervention at the grass-root level, the Hindustan Unilever Foundation
has created water potential of more than 1.3t liters.
67% of the tea sourced for Unilever’s brands in India is from sustainable sources.
93% of the tomatoes used in Kissan Ketchup are from sustainable sources.
100% of the chicory used is sourced sustainably as all of Unilever’s chicory
farmers in India are covered under the Unilever Sustainable Agriculture Code,
which provides farmers with knowledge and expertise about sustainable
agricultural practices.
HUVR has maintained its long-held commitment to send zero non-hazardous
waste to landfills from its factories. The total waste generated from its factories
declined 59% against the 2008 baseline. 100% of the non-hazardous waste
generated at its factories was recycled, reused, or sent for energy recovery in
environment-friendly ways.
Aim to be beacon of diversity
HUVR reiterated its commitment to being gender-balanced in its managerial
team over the next few years.
An important milestone in its diversity journey has been the recent induction of
female shop-floor employees at the Haldia and Kidderpore factories.
31 May 2021
15
 Motilal Oswal Financial Services
Hindustan Unilever
The company aims to ensure that the Unilever experience is fair for everyone
and fully includes members of the LGBTQI+ community, persons with disability,
and other minority groups.
Change in CFO
Mr Ritesh Tiwari was appointed Executive Director, Finance and Chief Financial
Officer of the company. He joined the Board of Directors with effect from 1
st
May’21.
Mr Srinivas Phatak, his predecessor, was elevated to the position of Executive
Vice President, Global Financial Control and Risk Management, Unilever. He
would cease to be a member of the Management Committee of HUVR.
31 May 2021
16
 Motilal Oswal Financial Services
Hindustan Unilever
Key tables and charts
Exhibit 25: Mr Sanjiv Mehta’s gross salary – INR154m
Particulars of Remuneration (INR m)
Gross salary
(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961
(b) Value of perquisites u/s 17(2) Income-tax Act, 1961
(c) Profits in lieu of salary under Section 17(3) Income-Tax Act, 1961
Stock Option
Sweat Equity
Commission
Others (Contribution to PF, Superannuation and Consultancy fees)
Total
Remuneration as % of staff cost
Remuneration as % of EBITDA
Remuneration as % of PAT
FY18
70
10
56
54
0
0
4
194
1.1
0.3
0.4
Sanjiv Mehta (Chairman and MD)
FY19
FY20
88
11
27
58
0
0
4
189
1.1
0.2
0.3
FY21
125
112
0
17
33
20
32
0
0
0
0
0
5
4
194
154
1.1
0.7
0.2
0.1
0.3
0.2
Source: Company, MOFSL
Exhibit 26: CFO’s total remuneration – INR71m
Particulars of Remuneration (INR m)
Gross salary
(a) Salary as per provisions contained in section 17(1) of the IT Act, 1961
(b) Value of perquisites u/s 17(2) Income-tax Act, 1961
(c) Profits in lieu of salary under Section 17(3) Income-Tax Act, 1961
Stock Option
Sweat Equity
Commission
Others (Contribution to PF, Superannuation and Consultancy fees)
Total
Remuneration as % of staff cost
Remuneration as % of EBITDA
Remuneration as % of PAT
*incl. remuneration paid to Mr. P. B. Balaji
Srinivas Phatak/ P. B. Balaji (ED, Finance and IT & CFO)
FY18*
FY19
FY20
FY21
37
0
2
0
0
0
3
42
0.2
0.1
0.1
22
0
19
4
0
0
4
49
0.3
0.1
0.1
24
32
0
0
14
11
8
0
0
0
0
0
5
6
51
71
0.3
0.3
0.1
0.1
0.1
0.1
Source: Company, MOFSL
Exhibit 27: Mr Wilhelmus Uijen’s total remuneration in FY21 – INR81m
Particulars of Remuneration (INR m)
Gross salary
(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961
(b) Value of perquisites u/s 17(2) Income-tax Act, 1961
(c) Profits in lieu of salary under Section 17(3) Income-Tax Act, 1961
Stock Option
Sweat Equity
Commission
Others (Contribution to PF, Superannuation and Consultancy fees)
Total
Remuneration as % of Staff Cost
Remuneration as % of EBITDA
Remuneration as % of PAT
*incl. remuneration paid to Mr. Banerjee
Wilhelmus Uijen / Pradeep Banerjee (ED, Supply Chain)
FY18
FY19
FY20*
FY21
20
0
20
10
0
0
4
55
0.3
0.1
0.1
24
0
3
17
0
0
15
59
0.3
0.1
0.1
13
2
2
0
0
0
58
75
0.4
0.1
0.1
53
20
6
0
0
0
3
81
0.4
0.1
0.1
Source: Company, MOFSL
31 May 2021
17
 Motilal Oswal Financial Services
Hindustan Unilever
Exhibit 28: Mr Dev Bajpai’s total remuneration in FY21 – INR55m
Particulars of Remuneration (INR m)
Gross salary
(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961
(b) Value of perquisites u/s 17(2) Income-tax Act, 1961
(c) Profits in lieu of salary under Section 17(3) Income-Tax Act, 1961
Stock Option
Sweat Equity
Commission
Others (Contribution to PF, Superannuation and Consultancy fees)
Total
Remuneration as % of staff cost
Remuneration as % of EBITDA
Remuneration as % of PAT
Dev Bajpai (ED, Legal and Corporate Affairs & CS)
FY18
FY19
FY20
FY21
21
0
15
21
0
0
4
60
0.3
0.1
0.1
22
0
16
25
0
0
4
68
0.4
0.1
0.1
25
29
0
6
13
13
13
0
0
0
0
0
5
8
55
55
0.3
0.2
0.1
0.0
0.1
0.1
Source: Company, MOFSL
Exhibit 29: Economic value add remains healthy
Particulars (INR b)
A. Cost of Capital Employed (COCE)
Average Debt
Average Equity
Average Capital Employed
Cost of Debt. Post tax %
Cost of Equity %
WACC %
COCE
B. Economic Value Added (EVA)
PAT (bei)
Add: Interest after taxes
Net Operating Profits After Taxes (NOPAT)
COCE, as per above
EVA
*Opening balance adjusted for GSK CH merger
FY12
-
34.6
34.6
6.2
10.1
10.1
3.5
26.0
0.0
26.0
3.5
22.5
FY13
-
40.2
40.2
6.0
10.1
10.1
4.0
33.1
0.2
33.3
4.0
29.3
FY14
-
37.2
37.2
6.4
11.6
11.6
4.3
35.6
0.2
35.8
4.3
31.5
FY15
-
43.4
43.4
5.6
10.9
10.9
4.7
38.4
0.1
38.5
4.7
33.8
FY16
-
56.6
56.6
5.4
12.0
12.0
6.8
41.2
-
41.2
6.8
34.4
FY17
-
58.3
58.3
4.9
12.9
12.9
7.5
42.5
-
42.5
7.5
35.0
FY18
-
61.8
61.8
5.2
14.2
14.2
8.8
51.4
-
51.4
8.8
42.6
FY19
-
66.7
66.7
5.8
11.8
11.8
7.9
FY20
-
72.3
72.3
5.3
9.1
9.1
6.6
FY21
-
468.9
468.9
4.7
8.9
8.9
41.5
60.8
67.4
79.6
-
-
-
60.8
67.4
79.6
7.9
6.6
41.5
52.9
60.9
38.1
Source: Company, MOFSL
Exhibit 30: CSR spend target for the year achieved
Details of CSR spend
Average Net Profit of the Company for last 3 financial years:
Prescribed CSR Expenditure
Details of CSR spends during the financial year 2019-20:
Total amount to be spent for the financial year (2% of Average Net Profit for the last 3 financial years)
Total amount spent during the financial year
Amount unspent, if any
INR m
80,870
1,617
1,617
1,651
-
Source: Company, MOFSL
Exhibit 31: Other operating income remains healthy component of sales
Particulars (INR m)
Sale of products (including excise duty)
as % of net revenue
Other operating revenue
Income from services rendered
Others (including government grant, scrap sales, etc.)
Other operating revenue as % of net revenue
FY17
339.0
98.3
5.9
5.1
0.8
1.7
FY18
346.2
98.3
6.0
3.6
2.4
1.7
FY19
376.6
98.5
5.6
3.0
2.6
1.5
FY20
382.7
98.7
5.1
2.6
2.6
1.3
FY21
453.1
98.5
6.9
2.3
4.6
1.5
Source: Company, MOFSL
31 May 2021
18
 Motilal Oswal Financial Services
Hindustan Unilever
Exhibit 32: Trade discounts decline YoY (as % of sales) in FY21
Particulars (INR b)
Contracted price
Less: Trade discounts, volume rebates, etc.
Sale of Products
Trade discounts as % of contracted price
Trade discounts as % of sale of products
FY19
429.0
52.4
376.6
12.2
13.9
FY20
442.0
59.2
382.7
13.4
15.5
FY21
509.1
55.9
453.1
11.0
12.3
Source: Company, MOFSL
Exhibit 33: Other non-operating income down 30% YoY to INR5.1b in FY21
Particulars (INR m)
Interest income on
Bank deposits
Current investments
Others (including interest on Income tax refunds)
Dividend income from
Subsidiaries
Current investments
Non-current investments
Fair value gain/ (loss)
Investments measured at fair value through profit or loss*
Investments measured at fair value through other comprehensive income
Net gain on sale of investments
Total
FY17
FY18
1,300
1,220
140
1,880
-
20
1,130
-
-
5,690
FY19
2,320
700
950
1,020
-
10
1,640
-
-
6,640
FY20
2,810
390
1,800
950
-
10
FY21
2,130
60
1,310
1,010
-
10
1,730
740
150
1,670
110
-
860
-
-
5,260
1,370
610
-
-
-
-
7,330
5,130
Source: Company, MOFSL
Exhibit 34: Breakup of current investments
Particulars (INR m)
Current investments
Other instruments
Fair value through other comprehensive income
Quoted
Investments in treasury bills
Fair value through profit and loss
Quoted
Investments in mutual funds
Total
FY17
FY18
FY19
FY20
FY21
14,590
14,590
20,600
20,600
35,190
10,250
10,250
18,300
18,300
28,550
8,800
8,800
18,130
18,130
26,930
-
-
6,470
6,470
12,480
20,360
12,480
20,360
12,480
26,830
Source: Company, MOFSL
Exhibit 35: Cash conversion cycle worsens marginally in FY21
Cash conversion cycle
Days (on avg basis)
Inventory days
Debtor days
Creditor days
Cash conversion cycle
Days (on year-end basis)
Inventory days
Debtor days
Creditor days
Cash conversion cycle
FY13
36
11
69
-23
36
12
73
-26
FY14
34
11
71
-26
36
11
75
-29
FY15
32
9
66
-24
31
9
63
-23
FY16
30
11
65
-24
30
13
69
-26
FY17
28
11
68
-28
27
11
69
-31
FY18
25
11
69
-33
25
12
74
-37
FY19
23
13
67
-31
23
16
68
-28
FY20
24
13
68
-31
25
10
70
-35
FY21
24
11
64
-29
FY22E
25
13
59
-21
FY23E
26
14
59
-19
27
29
28
13
15
14
68
63
64
-29
-19
-22
Source: Company, MOFSL
31 May 2021
19
 Motilal Oswal Financial Services
Hindustan Unilever
Exhibit 36: Inventory days flat YoY (on average), but up by 2 days on year-end basis in FY21
Particulars (Days)
On average basis
Raw material
Packing material
Work-in-progress
Finished goods
Stores and spares
Inventory
On year-end basis
Raw material
Packing material
Work-in-progress
Finished goods
Stores and spares
Inventory
FY17
9
1
3
14
1
28
9
1
2
14
1
27
FY18
8
1
2
13
1
25
8
1
3
13
1
25
8
0
2
12
1
23
8
0
2
12
1
23
FY19
FY20
8
1
2
12
1
24
FY21
8
1
3
11
1
24
9
10
1
1
2
3
12
12
1
1
25
27
Source: Company, MOFSL
Valuation and view
The company continues to place building blocks for future growth and has been
able to do so ahead of peers. It continues to display the dexterity shown over
the last decade despite its larger size, even as it continues to grow v/s peers.
HUVR continues to strengthen the key drivers of its success in India over the last
decade, including (a) pioneering the use of technology to generate data and
facilitate decision making, (b) the WiMI strategy, focused on decentralization
and localized strategies, (c) recognizing trends and investing in them early on,
(d) funneling cost savings back into the business, and (e) its strong execution
ability, which has led to a positive earnings momentum. The company’s earnings
growth has gained further impetus in recent years (before COVID-19 affected
FY21) – it reported a ~18% EPS CAGR in the four years ended FY20 v/s a ~12%
CAGR over FY10–20. This is particularly impressive given the weak mid-single-
digit earnings growth posted by (much smaller) peers in recent years.
After premiumization in Detergents led to strong growth in detergent sales and
margins in the last decade, the Personal Wash and Dishwashing segments show
considerable promise going forward. The high-margin Discretionary portfolio
was under pressure in FY21 – resulting in lower than the usual 12% adjusted EPS
growth) – and is expected to face significant pressure in FY22 as well (albeit less
than in the previous year). Nevertheless, the trajectory of premiumization over
the medium term is evident. Additionally, synergies from the GSKCH business
would play a big role in the resumption of strong earnings growth going
forward.
There is no material change in our forecasts. We maintain a
Buy
rating, with
unchanged TP of INR2,780 (55x Jun’23E EPS).
31 May 2021
20
 Motilal Oswal Financial Services
Hindustan Unilever
Exhibit 37: HUVR P/E (x)
75.0
P/E (x)
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
Exhibit 38: Consumer sector P/E (x)
51.0
P/E (x)
Min (x)
Avg (x)
+1SD
55.0
55.2
43.8
32.5
24.1
65.7
56.5
46.8
41.8
36.5
24.7
Max (x)
-1SD
41.0
42.3
31.2
35.0
31.0
15.0
21.0
Source: Bloomberg, Company, MOFSL
Source: Bloomberg, Company, MOFSL
31 May 2021
21
 Motilal Oswal Financial Services
Hindustan Unilever
Financials and valuations
Income Statement
Y/E March
Net Sales
Other Oper. Income
Total Revenue
Change (%)
COGS
Gross Profit
Gross Margin (%)
Operating Exp
% of sales
EBITDA
Change (%)
Margin (%)
Depreciation
Int. and Fin. Charges
Other Income - Recurring
Profit before Taxes
Change (%)
Margin (%)
Tax
Deferred Tax
Tax Rate (%)
Profit after Taxes
Change (%)
Margin (%)
Non-rec. (Exp)/Income
Reported PAT
FY17
313
319
2.7
157
162
50.8
102
31.9
60
5.2
19.0
4
0
5
62
3.0
19.7
19
0
31.0
42
1.9
13.6
2
45
6
FY18
339
6
345
8.3
162
183
53.0
110
31.9
73
20.3
21.1
5
0
6
73
19.4
21.7
21
-1
27.9
53
24.7
15.6
-1
52
FY19
377
6
382
10.7
180
203
53.0
116
30.4
86
18.7
22.6
5
0
7
87
19.1
23.2
27
-1
30.5
61
14.7
16.1
0
60
FY20
383
5
388
1.5
178
210
54.1
114
29.4
96
11.1
24.8
9
1
7
93
6.2
24.3
24
2
27.4
67
10.9
17.6
0
67
FY21
453
7
460
18.6
217
243
52.9
130
28.3
113
18.0
24.6
10
1
5
107
15.4
23.7
25
1
23.7
82
21.3
18.1
-2
80
FY22E
497
7
504
9.5
232
272
53.9
140
27.9
131
15.8
26.0
11
1
7
126
17.2
25.3
33
0
26.0
93
13.6
18.7
0
93
(INR b)
FY23E
570
8
577
14.6
263
315
54.5
161
27.8
154
17.4
26.7
11
1
11
152
21.1
26.7
38
0
25.2
114
22.5
20.0
0
114
Balance Sheet
Y/E March
Share Capital
Reserves
Net Worth
Loans
Capital Employed
Gross Block
Less: Accum. Depn.
Net Fixed Assets incl Goodwill
Capital WIP
Investment in Subsidiaries
Current Investments
Deferred Charges
Curr. Assets, L&A
Inventory
Account Receivables
Cash and Bank Balance
Others
Curr. Liab. and Prov.
Account Payables
Other Liabilities
Provisions
Net Current Assets
Application of Funds
E: MOFSL Estimates
FY17
2
63
65
0
65
66
-26
40
2
3
35
2
66
24
9
17
16
83
60
14
9
-17
65
FY18
2
69
71
0
71
72
-30
41
4
3
29
3
92
24
11
34
23
101
70
16
14
-9
71
FY19
2
74
77
0
77
79
-36
43
4
3
27
3
99
24
17
37
21
102
71
16
16
-3
77
FY20
2
78
80
0
80
96
-45
51
5
3
13
3
123
26
10
50
36
116
74
26
16
7
80
FY21
2
472
474
0
474
565
-55
510
6
3
27
-60
135
34
16
43
41
147
86
40
20
-12
474
FY22E
2
473
476
0
476
570
-66
504
6
3
30
-60
151
39
21
48
42
159
94
42
22
-8
476
(INR b)
FY23E
2
475
478
0
478
575
-78
497
6
3
34
-60
174
44
22
60
48
177
109
44
23
-3
478
0
31 May 2021
22
 Motilal Oswal Financial Services
Hindustan Unilever
Financials and valuations
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout %
Valuation (x)
P/E
Cash P/E
EV/Sales
EV/EBITDA
P/BV
Dividend Yield (%)
Return Ratios (%)
RoE incl. Goodwill
RoCE incl. Goodwill
Working Capital Ratios
Debtor (Days)
Asset Turnover (x)
Leverage Ratio
Debt/Equity (x)
FY17
19.6
21.5
30.0
17.0
98
119.2
109.1
16.1
83.5
78.1
0.7
66.5
96.7
11
4.8
0.0
FY18
24.5
26.7
32.7
20.0
99
95.6
87.7
14.8
69.1
71.6
0.9
78.1
108.6
12
4.8
0.0
FY19
28.1
30.5
35.4
22.0
95
83.4
76.7
13.4
58.2
66.2
0.9
82.5
119.1
16
4.9
0.0
FY20
31.2
35.6
37.2
25.0
96
75.0
65.8
13.1
52.1
63.0
1.1
86.0
119.8
10
4.8
0.0
FY21
34.8
39.1
201.8
40.5
116
67.3
59.9
12.0
48.2
11.6
1.7
29.5
39.0
13
1.0
0.0
FY22E
39.5
44.4
202.4
39.0
99
59.2
52.8
11.0
41.6
11.6
1.7
19.6
26.6
16
1.0
0.0
FY23E
48.4
53.3
203.3
47.5
98
48.3
43.9
9.5
35.3
11.5
2.0
23.9
32.1
14
1.2
0.0
Cash Flow Statement
Y/E March
OP/(loss) before Tax
Financial other income
Depreciation
Net Interest Paid
Direct Taxes Paid
(Incr)/Decr in WC
CF from Operations
Other Items
(Incr)/Decr in FA
Free Cash Flow
(Pur)/Sale of Investments
CF from Invest.
Dividend Paid
Others
CF from Fin. Activity
Incr/Decr of Cash
Add: Opening Balance
Closing Balance
E: MOFSL Estimates
FY17
62
-1
4
-2
-18
5
50
0
-9
41
-10
-18
-36
-7
-43
-11
28
17
FY18
73
-3
5
-2
-22
9
59
5
-8
51
8
4
-39
-8
-47
17
17
34
FY19
85
-1
5
-3
-27
-3
57
4
-7
50
3
0
-45
-9
-55
3
34
37
FY20
91
-2
9
-4
-25
3
73
-8
-7
66
22
7
-62
-4
-67
13
37
50
FY21
105
1
11
-2
-24
-1
90
12
-40
50
24
-4
-88
-5
-93
-7
50
43
FY22E
126
-7
11
1
-33
0
99
10
-5
94
-3
2
-92
-4
-95
5
43
48
(INR b)
FY23E
152
-11
11
1
-38
7
123
13
-5
118
-4
4
-112
-4
-115
12
48
60
31 May 2021
23
 Motilal Oswal Financial Services
Hindustan Unilever
NOTES
31 May 2021
24
 Motilal Oswal Financial Services
Hindustan Unilever
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are
available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the
website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,
of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
31 May 2021
25
 Motilal Oswal Financial Services
Hindustan Unilever
********************************************************************************************************************************
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in
nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or
entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
31 May 2021
26