📢 5 STEPS TOWARDS WEALTH 🚀 The Indian Stock Market Way
HISTORY:
In 1888, crates of Sunlight soap arrived at the Kolkata harbour marking the beginning of their journey in India. On the 17th of October 1933, business was incorporated in India, and since then, they have traversed the past nine decades alongside the country penetrated in each and every house. In 1930s Lever Brothers India Limited incorporated in India — established its first soap factory in Sewri, Bombay. Hindustan Unilever Limited (HUL) is a British-owned Indian consumer goods company. It is a subsidiary of the British company Unilever. Its products include foods, beverages, cleaning agents, personal care products, water purifiers and other fast-moving consumer goods (FMCGs). HUL was established in 1931 as Hindustan Vanaspati Manufacturing Co. Lever Brothers India Limited, Hindustan Vanaspati Manufacturing Company Limited, and United Traders Limited merged in 1956 to form Hindustan Lever Limited (HLL), with 10% Indian equity participation. Tata Oil Mills Limited merged with HLL, in the largest M&A in Indian corporate history at the time in 1994. Brooke Bond Lipton India Limited merged with HLL in 1996. Lakme Lever Private Limited was formed in 1996. The company was renamed again in June 2007 as Hindustan Unilever Limited. As of 2019, Hindustan Unilever's portfolio had more than 50 product brands in 14 categories. In 2020 GSK Consumer Healthcare merged with HUL marking the largest M&A deal in Indian FMCG industry. Iconic health food drink brands — Horlicks and Boost became part of HUL’s portfolio. Today 9/10 Households in India use at least 1 or more brands of HUL. The Brands like Surf and Brooke Bond are with more than 5000 Cr annual sales. While the brands like Lifebouy, Glow&Lovely, Dove, Ponds, Lux, Wheel, Rin, Vim & Horlicks are with more than 2000 cr annual sales. They have 19 strong brands which exceed a turnover of 1000 Cr and more. Yes, these are the companies within the company itself. 75% of products are with business winning market share of 75% plus.
Growth:
HUL sales and profits during fy_2000 was around 10000 Cr & 1300 Cr. Even during that time HUL was among India's largest companies and this is the company among few 8 players that are in Nifty_50 since the inception of Nifty_50. Today HUL is able to generate sales of 59000 Cr which is 6X, and profits of the landmark 10000 Cr which is again near to 8X. Great achievement as HUL did the consistent profits during its whole history. They distribute around 90% of the profits in dividends. We saw 10% CAGR growth during last decade both due to organic as well as in_organic growth.
Q3_Fy_2024:
Uneven monsoon, Delayed winter & Weak consumer sentiment gave the muted growth. Growth even further slowed down this quarter with just 2% volume growth. Growth led by urban 3% growth, while rural remains subdued with -1% growth. Muted Sales growth of 3% was seen this 9M. Homecare along with Beauty & Personal care contributes around 70% of total sales which grew by 3% respectively. Rawmaterial cost has decreased by 4% due to favoirable cooling inflation, but HUL was aggresive in advertisiments as it grew by 35%. Profit growth of 2.4% was seen due to decrease in Profit margin by 10bps. Looking forward should remain cautiously optimistic. Expect gradual demand recovery to continue. Rural income growths and winter crop yields key factors determining pace of recovery. With commodity prices remaining benign, competitive intensity likely to stay high. Can expect this year muted growth of 2.5% in sales while Profits may be flat with negligible growth. FMCG market cumulative price growth (3-year) was seen more then 20% which helped good strong growth during last 3 years despite low volume growth. Over the long-term period we can assure 10% sales and profit growth. Yes, growth is less but HUL is a highly consistent company and can expect high & consistent profitability. We may see landmark 1 Lakh Cr sales till the year 2030 and in the year 2033 when they mark their 100 years of establishment their sales would have reached 1.5 lakh Cr.
Action:
We have been recommending this company for a long time. New buying again can be done during current fall due to muted salesd growth in the whole range of 2358 to even 1833 while the target next year itself could be 3408. Anyway, a multiyear rally with growth of around 12% along with consistent dividends could be expected.
SHP:
Around 62% stake is with foreign promoter Uniliver, while 12% stake is with MF & Insurance companies. FII holds around 15% of the stake.
DISCLOSURE: FOR EDUCATION PURPOSES, DO NOT TREAT AS A RECOMENDATION
