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Hola Techno Funda folks!

This is perhaps the first post on the website. Since you workaround the stocks all day I would like to bring your attention towards not only the financial aspects but also what is latest going on in the companies and what strategies are the executives following with regard to future perspectives. So, if you are wondering this post would help you go through all the current information in a jiffy!

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Starting with all guns blazing, lets jump into the corporate arena of one of the most sought after FMCG company which has a rich product line and has been catering to Indian consumer for years. Yes, I am talking about none other than HUL Ltd.

Economic Scenario

FMCG is an industry where money velocity counts a great deal to hit the ground running. When demonetization came into picture in November 2016, it impacted significantly to the sales as people tailored their needs because of cash crunch and hence money velocity was hampered. However, now it’s important to call out that trade conditions have normalized, and pipelines are now stable as the economy has remonetized. Important to see this in the context of what really happened post GST and GST 2.0 implementation. FMCG revenue grew 14.8% during October- December 2017 mainly when government reduced GST rates for 175 plus products with effect from November 15, 2017. While the consumer demand was intact, there was a bit of recalibration of the stock levels. From a quarter perspective that came back to normal.

Input costs continue to inflate in certain categories – in select categories and they’re primarily crude led and also some pressure from the currency is visible. Crude has moved in the last quarter-and-a-half as it already has moved up by 20-odd percent the currency has actually depreciated by 5%-6%. So, company really has to be agile in order to manage such emerging inflationary pressures.

Inflationary pressures will continue to remain elevated. Never the less, focus on driving volume growth and improvement in operating margins by HUL is consistent and the growth model where in the growth is consistent, competitive, profitable and responsible, will actually continue to hold the company in good stead.

Data points for share holders

March quarter particularly for the company has been a strong volume-led growth. On a comparable basis:-

  • The domestic consumer growth at 16%
  • Underlying volume at 11%
  • EBITDA margins up by 24%
  • The profit before exceptional at INR 1,409 crores is up 26%.

Company has had some exceptionals in the current quarter and because of the base effect, net profit goes up by about 14% at INR 1,351 crores. When we look at the top line, reported sales growth is 3%. The turnover sits at INR 9,003 crores and profit before exceptional items is INR 1,409 crores, which is really up 26%.

Looking at it from a financial year 2017-2018, the strong performance is seen throughout the year. On the comparable basis:-

  • Consumer growth was at 12%
  • Underlying volume of 6%
  • EBITDA is up 20%
  • PAT before exceptionals 21%


The cash generation from operations was also upwards of INR 8,000 crores, which is a 20% increase and the turnover is at INR 34,619 crores, where the reported growth is up 2%. Net profit is INR 5,237 crores, which is up 17%.

Talking about the margins, it is important that Home Care, which used to be a few years ago in single-digit margins, today, is at a healthy 14% and therefore, working well from a top line point of view and is at a healthy margin profile. Personal Care with high gross margins, close to 25%. Refreshments, with the totality of what we have done, again, we have upped the margins to about 17%. And in Foods, we continue to invest behind the brand. I think this starts to say that look, we are managing the business, given the consumer preferences, the dynamics and we are running it in a right manner.

The board has recognized this and would like to award the shareholders. We’re increasing our final dividend, or the proposed dividend is being increased to INR 12 per share, up from INR 10 last year. So, from a full-year perspective, there is a INR 3 increase to the total dividend, which is being proposed and this will be subject to the approvals of the shareholders in the general body meeting.

Segmental growth

Taking a glance at the segmental performance, it has been a quarter of strong comparable growth coming through across all our segments.

Home Care has grown upwards of 20%.

This has been both in laundry and Household Care. Focus on premiumization, targeted market development is yielding results. The Household Care performance was led by Vim. After a strong performance over the last couple of years, Comfort has now been extended to fabric conditioner for baby. The thrust on market development has started to reap dividends for us in a pretty significant way.

Personal Care growing at 13% with double-digits coming from both from Personal Products and Personal Wash point of view. Company has double-digit growth across care and wash.

  • Looking at it from a personal wash point of view, the premium range continues to perform remarkably well.
  • Skin Care performance was led by strong growth both from a Fair & Lovely and a Pond’s point of view.
  • And in Hair, new anti-dandruff range of shampoos under the Pure Derm brand was launched.
  • In Colour Cosmetics, a very robust growth has been witnessed in this category.  Lakmé Nudes, which is a new range and has been launched from an Indian-skin perspective.
  • In deodorants, the growth has really been led by Axe Ticket, the pocket-based perfume and the national rollout of Rexona anti-perspirants.
  • Oral Care growth was driven by launch of a new naturals variant. As far as the naturals portfolio is concerned, a three-pronged strategy has been articulated. It is the master brand Lever ayush, where the whole focus has been on driving trials and building the brand equity. The other, the specialist brands like Indulekha, the company has extended it  into shampoo.

In Refreshments, we have seen robust growth across categories

  • Tea and Home Care are places, the WiMI strategy has yielded us good results.
  • Coffee has performed well, and the growth is really volume led.
  • Ice Creams and Frozen Desserts have now embarked on a geography expansion plan, which is really working well from a growth point of view and the innovations going into the season has also helped with the performance.


Growth has really been led by Kissan and Knorr. Kissan growth was really led by strong performance in ketchups. In Knorr, the instant soups are doing well.

What’s new?

There were many launches in the Personal Products as the part of the portfolio. In Pond’s talc for instance, a new variant is launched. Lakmé launched the new Lakmé Nudes range, that has been tailor-made for the Indian skin tones. Axe Ticket, a new pocket spray and the Comfort conditioner is really building the segment of the future.

Apart from Personal Care, Ice Cream and Frozen Desserts saw multiple innovations getting launched this quarter ahead of the summer season. The company is entering new geographies and hence are seeing benefits of that come through in our growth number. In Foods, good growth across ketchup and soups is seen and the new Knorr red & white pasta masalas has been launched in select geographies.

Last but not the least, brands for purpose run the business and they are actually continuing to perform quite well.


Reflecting on the performance for the entire year, it can be seen that in a year full of turbulence, HUL on a comparable basis delivered double-digit growth with half the growth coming from (underlying volume growth) UVG. There has also been impressive improvement in margins.

A few things very clearly stand out. First, our Winning in Many Indias(WiMI) and (Country Category Business Teams) CCBT structures provide HUL with a real competitive edge. They have infused huge energy in the business and made the organization much more agile. Second, the focus on strengthening the core, building categories of the future and the relentless focus on eliminating non-value adding cost has accelerated a virtuous cycle of growth to ensure that HUL is able to deliver strong results across the whole lines of the P&L.

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