Hindustan Unilever reports 9.9% EBITDA growth in 2016 and 4.1% Revenue growth

09-05-2016 • About Hindustan Unilever ($HINDUNILVR) • By InTwits

Hindustan Unilever reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:

• Hindustan Unilever has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.9%. At the same time it's in pair with industry average of 16.5%
• CAPEX is quite volatile: ₹8,245m in FY2016, ₹6,057m in FY2015, ₹6,064m in FY2014, ₹4,415m in FY2013, ₹2,806m in FY2012
• The company has highly profitable business model: ROIC is 136.2%

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

The company's Revenue increased on 4.1%. Revenue decline was accelerating on average at -3.1 pp per annum in FY2012-FY2016. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 3.2 pp from 17.7% to 14.6% in FY2016. EBITDA Margin stuck to a growing trend at 0.77 pp per annum in FY2012-FY2016.

Net Income margin decreased slightly on 1.4 pp from 14.0% to 12.6% in FY2016.

Investments (CAPEX, working capital and M&A)

The company's CAPEX/Revenue was 2.5% in FY2016. The company's CAPEX/Revenue increased slightly on 0.86 pp from 1.7% in FY2013 to 2.5% in FY2016. It's average CAPEX/Revenue for the last three years was 2.2%. CAPEX as a % of Revenue grew at 0.29 pp per annum in the last 5 years.

Return on investment

The company operates at high and attractive ROIC (136.2%) and ROE (102.1%). ROIC increased on 2.2 pp from 134% to 136% in FY2016. ROE dropped on 13.3 pp from 115% to 102% in FY2016. ROIC stuck to a growing trend at 9.2 pp per annum in the last 5 years. During FY2012-FY2016 ROE topped in FY2014 at 123% and was declining since that time.

Leverage (Debt)

Debt level is -0.1x Net Debt / EBITDA and 0.0x Debt / EBITDA. Debt jumped on 492% while cash increased on 5.5%.

Hindustan Unilever has no short term refinancing risk: cash is higher than short term debt (448.7%).

Management team

The company's CFO is P B Balaji. P B Balaji has 6 years tenure at the company.

Financial and operational results

Hindustan Unilever ($HINDUNILVR) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	229,877	263,172	285,394	311,997	324,827	4.1%
EBITDA	34,836	42,053	47,457	54,137	59,496	9.9%
Net Income	27,907	38,290	39,456	43,631	40,824	-6.4%
Balance Sheet
Cash	10,091	5,334	9,306	9,051	9,546	5.5%
Short Term Debt	0	163	371	360	2,128	490.4%
Long Term Debt	0	84	84	70	420	500.0%
Cash flow
Capex	2,806	4,415	6,064	6,057	8,245	36.1%
Ratios
Revenue growth	17.0%	14.5%	8.4%	9.3%	4.1%
EBITDA growth	26.8%	20.7%	12.8%	14.1%	9.9%
EBITDA Margin	15.2%	16.0%	16.6%	17.4%	18.3%	1.0%
Net Income Margin	12.1%	14.5%	13.8%	14.0%	12.6%	-1.4%
CAPEX, % of revenue	1.2%	1.7%	2.1%	1.9%	2.5%	0.6%
ROIC	99.9%	114.4%	133.0%	133.9%	136.2%	2.2%
ROE	87.0%	117.0%	123.3%	115.4%	102.1%	-13.3%
Net Debt/EBITDA	-0.3x	-0.1x	-0.2x	-0.2x	-0.1x	0.0x

Peers in Personal Products

Below you can find Hindustan Unilever benchmarking vs. other companies in Personal Products industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Bajaj Corp ($BAJAJCORP)	-	28.2%	10.7%	22.9%	6.2%
Marico ($MARICO)	-	15.5%	2.0%	22.3%	7.0%
Emami ($EMAMILTD)	-	16.9%	7.2%	21.8%	18.3%
Bliss Gvs Pharma ($BLISSGVS)	-	48.5%	-13.1%	17.0%	-
Procter & Gamble Hygiene & Health Care ($PGHH)	29.4%	29.9%	21.5%	13.9%	-
Median (8 companies)	23.6%	22.8%	11.9%	15.4%	8.0%
Hindustan Unilever ($HINDUNILVR)	-	14.5%	8.4%	9.3%	4.1%

Top companies by EBITDA margin, %

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Bajaj Corp ($BAJAJCORP)	24.6%	28.4%	27.7%	29.0%	31.2%
Cupid ($CUPID)	-	-	-	28.9%	-
Bliss Gvs Pharma ($BLISSGVS)	27.2%	28.1%	20.9%	25.7%	-
Emami ($EMAMILTD)	20.9%	20.5%	24.3%	25.0%	26.1%
Procter & Gamble Hygiene & Health Care ($PGHH)	16.3%	15.4%	20.7%	21.3%	-
Median (10 companies)	19.5%	18.3%	19.7%	21.0%	18.1%
Hindustan Unilever ($HINDUNILVR)	15.2%	16.0%	16.6%	17.4%	18.3%

Top companies by CAPEX/Revenue, %

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Colgate-Palmolive (India) ($COLPAL)	3.8%	4.9%	9.0%	7.5%	-
Bliss Gvs Pharma ($BLISSGVS)	8.7%	5.0%	16.7%	7.0%	-
Emami ($EMAMILTD)	8.0%	5.0%	3.6%	5.0%	69.3%
Dabur India ($DABUR)	4.4%	3.9%	3.0%	3.4%	2.6%
Procter & Gamble Hygiene & Health Care ($PGHH)	4.2%	2.2%	7.2%	3.4%	-
Median (9 companies)	4.2%	4.5%	5.4%	3.4%	2.3%
Hindustan Unilever ($HINDUNILVR)	1.2%	1.7%	2.1%	1.9%	2.5%

Top companies by ROIC, %

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Colgate-Palmolive (India) ($COLPAL)	121.4%	120.4%	104.4%	99.9%	-
Bajaj Corp ($BAJAJCORP)	-	36.9%	36.2%	46.5%	54.8%
Emami ($EMAMILTD)	31.5%	36.7%	43.3%	45.4%	25.1%
Procter & Gamble Hygiene & Health Care ($PGHH)	28.1%	30.3%	43.2%	40.1%	-
Marico ($MARICO)	23.2%	22.6%	26.9%	36.1%	40.6%
Median (10 companies)	25.6%	29.5%	28.9%	36.1%	29.5%
Hindustan Unilever ($HINDUNILVR)	99.9%	114.4%	133.0%	133.9%	136.2%

Top companies by Net Debt / EBITDA

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Godrej Consumer Products ($GODREJCP)	1.6x	1.7x	1.5x	1.7x	1.4x
Bliss Gvs Pharma ($BLISSGVS)	0.0x	1.1x	1.9x	1.4x	-
Dabur India ($DABUR)	0.8x	1.2x	0.3x	0.5x	0.4x
Marico ($MARICO)	1.5x	1.3x	0.9x	0.3x	0.0x
Cupid ($CUPID)	1.7x	0.5x	1.4x	-0.1x	-
Median (9 companies)	0.6x	0.5x	0.3x	-0.1x	0.4x
Hindustan Unilever ($HINDUNILVR)	-0.3x	-0.1x	-0.2x	-0.2x	-0.1x

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