Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
HUVR returned to balanced revenue growth in 1QFY12. This is its second quarter of about
10% EBITDA growth – after declining four quarters. The contribution of the personal products
business to EBIT has risen to 55.5% (36% 10 years ago). We believe this is structurally
positive and is a re-rating catalyst. Buy
Personal products take centre stage in overall profits
HUVR’s personal products business is growing in size and relevance to overall profitability.
The contribution of personal products to its EBIT has risen from 36% in 2001 to 55.5%
(average of last four quarters). Over the last five years, revenue from the personal products
business hit a 15% CAGR, while EBIT hit a 13% CAGR, while the soaps and detergent
business EBIT grew 3%, slowing average growth to 10%.
The worst may be over for soaps and detergent margins
While revenue from the soaps and detergents business grew 12% over the last five years,
EBIT grew 3%. EBIT margin slipped from 23.5% in 2001 to 9.5% in FY11. At this level, the
EBIT margin is one of the lowest across any FMCG category and, given the improving mix in
HUVR’s soaps and detergents portfolio from premium products (like Dove in soaps), we see
limited downside to margins. Besides, the contribution from this division has fallen from 51%
of overall EBIT to 29.2% over the last four quarters.
Maintain Buy, with Rs355 target price
We have introduced FY14 EPS estimates at Rs15.1/share, and have cut our FY12-13 estimates
1-2% to factor in the slightly weaker-than-expected EBITDA growth in 1QFY12. We expect an
EPS CAGR of 15% over the next three years, as we believe HUVR’s margins will gradually
improve driven by rising revenues from the personal products business (EBIT margins at 25.6%
in FY11, compared to 9.5% in soaps & detergents), and 13% revenue growth. In India, HUVR is
one of the best positioned companies to capitalise on improving rural spending, given its
increased focus on strengthening its already strong distribution network. We have raised our
DCF-based target price to Rs355 (from Rs337) as we roll forward our estimates.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
HUVR returned to balanced revenue growth in 1QFY12. This is its second quarter of about
10% EBITDA growth – after declining four quarters. The contribution of the personal products
business to EBIT has risen to 55.5% (36% 10 years ago). We believe this is structurally
positive and is a re-rating catalyst. Buy
Personal products take centre stage in overall profits
HUVR’s personal products business is growing in size and relevance to overall profitability.
The contribution of personal products to its EBIT has risen from 36% in 2001 to 55.5%
(average of last four quarters). Over the last five years, revenue from the personal products
business hit a 15% CAGR, while EBIT hit a 13% CAGR, while the soaps and detergent
business EBIT grew 3%, slowing average growth to 10%.
The worst may be over for soaps and detergent margins
While revenue from the soaps and detergents business grew 12% over the last five years,
EBIT grew 3%. EBIT margin slipped from 23.5% in 2001 to 9.5% in FY11. At this level, the
EBIT margin is one of the lowest across any FMCG category and, given the improving mix in
HUVR’s soaps and detergents portfolio from premium products (like Dove in soaps), we see
limited downside to margins. Besides, the contribution from this division has fallen from 51%
of overall EBIT to 29.2% over the last four quarters.
Maintain Buy, with Rs355 target price
We have introduced FY14 EPS estimates at Rs15.1/share, and have cut our FY12-13 estimates
1-2% to factor in the slightly weaker-than-expected EBITDA growth in 1QFY12. We expect an
EPS CAGR of 15% over the next three years, as we believe HUVR’s margins will gradually
improve driven by rising revenues from the personal products business (EBIT margins at 25.6%
in FY11, compared to 9.5% in soaps & detergents), and 13% revenue growth. In India, HUVR is
one of the best positioned companies to capitalise on improving rural spending, given its
increased focus on strengthening its already strong distribution network. We have raised our
DCF-based target price to Rs355 (from Rs337) as we roll forward our estimates.
No comments:
Post a Comment