In the three months ended June 2018, domestic consumer sales for Hindustan Unilever grew by 16 per cent y-o-y to ₹9,356 crore, backed by an underlying volume growth of 12 per cent. Profits grew 19 per cent y-o-y to ₹1,529 crore.

Growth in the latest quarter has been broad-based, with all major segments — home care, beauty & personal care, and foods & refreshments — showing double-digit increase in revenues.

During the quarter, although prices of vegetable oil-based inputs remained benign, the company witnessed some cost pressures from rise in prices of crude-based inputs.

Advertising spends increased by about 240 basis points over the June 2017 quarter to 12.3 per cent of sales now. Yet, cost-control efforts, along with price increases in select categories, helped in margin expansion.

Operating margin came in at 23.7 per cent, about a percentage point higher than a year ago.

Improving performance of HUL after the GST blip has seen the stock gain about 30 per cent so far in 2018.

HUL now trades at a rich valuation (price to earnings) of 69 times its trailing 12-month earnings compared with its three-year historical average PE of 49 times.

 

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