Report submitted in partial fulfilment for the post mid-term assessment of the degree of

Post Graduate Program in Management (PGPM)

By
Sweta Singh (21BSP1274)
Deepali Raj (21BSP3525)
Pallavi Choudhury (21BSP1217)
Section - B

Under the guidance of

Prof. Sujoy Kumar Dhar

ICFAI BUSINESS SCHOOL, KOLKATA

WEST BENGAL
(BATCH OF 2023)
 ABOUT THE COMPANY

Hindustan Unilever Limited (HUL) is the subsidiary of Unilever which is a British-Dutch

multinational company. It is headquartered in Mumbai, India. Its products include foods,
beverages, cleaning agents, personal care products, water purifiers and fast-moving consumer
goods.
HUL was established in 1933 as Lever Brothers of United Kingdom and following a merger of
constituent groups in 1956, it was renamed ‘Hindustan Lever Limited’. The company was
renamed in June 2007 as ‘Hindustan Unilever Limited’.
Hindustan Unilever Limited (HUL) is India’s largest Fast-Moving Consumer Goods company
with a heritage of over 80 years in India. On any given day, nine out of ten Indian households
use HUL’s products to feel good, look good and get more out of life - giving them a unique
opportunity to build a brighter future.
HUL works to create a better future every day and get more out of life with brands and services
that are good for them and good for others.
With over 35 brands spanning 20 distinct categories such as soaps, detergents, shampoos, skin
care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water
purifiers, the company is a part of the everyday life of millions of consumers across India. Its
portfolio includes leading household brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair
& Lovely, Pond’s, Vaseline, Lakme, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe,
Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s and Pureit.
The Company has about 21,000 employees and has sales of INR 38,273 crores (the financial
year 2019-20). HUL is a subsidiary of Unilever, one of the world’s leading suppliers of Food,
Home Care, Personal Care and Refreshment products with sales in over 190 countries and an
annual sales turnover of €52 billion in 2019. Unilever has over 67% shareholding in HUL.
Hindustan Unilever’s corporate headquarters are located at Andheri. Mumbai campus is spread
over 12.5 acres of land and houses over 1,600 employees. The campus is designed by Mumbai
based architecture firm Kapadia Associates.
 FINANCIAL STATEMENTS

Financial statements are summary report that shows how a firm has used the funds entrusted to it
by its shareholders and lenders, and what is its current financial position. According to the
American Institute of Certified Public Accountants (AICPA), financial statements are prepared
for the purpose of presenting a periodical review or report on the progress by the management
and deals with the status of the investments in business and results achieved during the period
under review.
As per AICPA, financial statements reflect a combination of recorded facts, accounting
principles and personal judgement.
Types of financial statements:
i. Balance sheet: It shows the entity’s assets, liabilities, and stockholder’s equity as of the
report date. It does not show information that covers a span of time.
ii. Income statement: It shows the results of entity’s operations and financial activities for
the reporting period. It includes revenues, expenses, gains, and losses.
iii. Statement of cash flows: It shows the changes in the equity’s cash flows during the
reporting period.
iv. Statement of changes in equity: it shows the movements of equity in addition to
accumulated earnings and losses so as to enable the readers to depict on the sources
(where it comes from) and outlets of equity (where did it go).
v. Supplementary notes: It includes explanations of various activities, additional detail on
some accounts, and other items as mandated by the applicable accounting framework,
such as GAAP or IFRS.
Financial statement analysis:
- For an outside user, the details in the financial statements signify only raw data
- This data needs to be reorganized, processed and converted into an easy to understand
form
- The process of breaking up a large mass of raw data into manageable form is referred to
as analysis of financial statements
- Financial statement analysis refers to detailed study of financial statements
- Financial statement analysis is the process of identifying financial strengths and
weakness of the firm by establishing relationship between the items of financial
statements
 BALANCE SHEET OF HINDUSTAN
UNILEVER (in Rs. Cr.) Mar-22 Mar-21 Mar-20
12months 12months 12months
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 235 235 216
TOTAL SHARE CAPITAL 235 235 216
Reserves and Surplus 48,826.00 47,439.00 7,998.00
TOTAL RESERVES AND SURPLUS 48,826.00 47,439.00 7,998.00
TOTAL SHAREHOLDERS FUNDS 49,061.00 47,674.00 8,229.00
Minority Interest 26 20 17
NON-CURRENT LIABILITIES
Long Term Borrowings 0 0 0
Deferred Tax Liabilities [Net] 6,141.00 5,988.00 0
Other Long-Term Liabilities 2,429.00 2,394.00 1,363.00
Long Term Provisions 1,580.00 1,578.00 1,227.00
TOTAL NON-CURRENT LIABILITIES 10,150.00 9,960.00 2,590.00

CURRENT LIABILITIES
Short Term Borrowings 0 0 0
Trade Payables 9,068.00 8,802.00 7,535.00
Other Current Liabilities 1,866.00 1,794.00 1,360.00
Short Term Provisions 346 507 422
TOTAL CURRENT LIABILITIES 11,280.00 11,103.00 9,317.00
TOTAL CAPITAL AND LIABILITIES 70,517.00 68,757.00 20,153.00
ASSETS
NON-CURRENT ASSETS
Tangible Assets 6,169.00 6,116.00 4,960.00
Intangible Assets 27,907.00 27,930.00 402
Capital Work-In-Progress 1,313.00 745 597
FIXED ASSETS 35,389.00 34,791.00 5,959.00
Non-Current Investments 2 2 2
Deferred Tax Assets [Net] 11 17 284
Long Term Loans and Advances 115 251 238
Other Non-Current Assets 2,081.00 2,082.00 1,232.00
TOTAL NON-CURRENT ASSETS 54,995.00 54,540.00 7,832.00
CURRENT ASSETS
Current Investments 3,519.00 2,707.00 1,253.00
Inventories 4,096.00 3,579.00 2,767.00
Trade Receivables 2,236.00 1,758.00 1,149.00
Cash And Cash Equivalents 3,846.00 4,471.00 5,113.00
Short Term Loans and Advances 35 0 0
Other Current Assets 1,790.00 1,702.00 2,039.00
TOTAL CURRENT ASSETS 15,522.00 14,217.00 12,321.00
 TOTAL ASSETS 70,517.00 68,757.00 20,153.00
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES,
COMMITMENTS
Contingent Liabilities 3,230.00 2,985.00 2,923.00
BONUS DETAILS
Bonus Equity Share Capital 131.69 131.69 131.69
NON-CURRENT INVESTMENTS
Non-Current Investments Quoted
Market Value 0 0 0
Non-Current Investments Unquoted
Book Value 2 2 2
CURRENT INVESTMENTS
Current Investments Quoted Market
Value 3,519.00 2,707.00 1,253.00
Current Investments Unquoted Book
Value 0 0 0

Interpretation :
1. The company’s current liabilities during FY22 stood at Rs 11280 as compared to Rs
11103 in FY21, thereby witnessing an increase of 1.6% .
2. Current assets rose 9% and stood at Rs 15522, while fixed assets rose 1% and stood at
Rs 14217 in FY 21.
3. Overall, the total assets and liabilities for FY22 stood at Rs 705 billion as again Rs 687
billion during FY21, thereby witnessing a growth of 3%.

RATIO ANALYSIS
 Financial ratio analysis is a useful technique to measure, compare, and evaluate the financial
condition and performance of a consumer. Ratio analysis enables a credit manager to spot trends
in a customer’s financial performance, and to compare its performance and financial condition
with the average performance of similar businesses in the same industry.
Financial ratio analysis is a useful tool for determining a customer’s overall financial condition.
Industry - wide financial ratios are published by a variety of sources. The ratios are also useful
for making quick comparisons. Banks and trade creditors use financial ratio analysis to help
them decide whether a business is a good credit risk or not.
Ratio analysis is a tool to help evaluate the overall financial condition of a customer’s business.
Ratios are useful for making comparison between a customer and other businesses in an industry.
Creditors use ratios to chart a company’s progress, uncover trends and point to a potential
problem area.
Financial ratios allow us to look at profitability, use of assets, inventories, and other costs
associated with the finance of the business. We can also use them to learn how quickly people
pay their bills, how long it takes the company to recover its costs for new equipment, how much
cash the company has relative to its debt, and its return (profit) on every dollar the company
invests.
Financial ratios are created with the use of numerical values taken from financial statements to
gain meaningful information about a company. The numbers found on a company’s financial
statements - are used to perform quantitative analysis and assess a company’s liquidity, leverage,
growth, margins, profitability, rates of return, valuation, and more.

Hindustan Unilever LTD.

Key Financial Ratios in Rs. Cr.
Mar Mar Mar Mar
Mar '18 Mar '17
'22 '21 '20 '19

Investment Valuation Ratios

Face Value 1.00 1 1 1 1 1
Dividend Per Share 34.00 31 34.5 22 20 17
Operating Profit Per Share (Rs) 53.21 50.37 44.35 39.9 33.61 27.94
217.8 195.7 179.1 176.5
Net Operating Profit Per Share (Rs) 159.5 147.34
8 3 7 8
Free Reserves Per Share (Rs) -- - -- -- -- --
Bonus in Equity Capital 56.03 60.96 60.96 60.96 60.96 60.96
Profitability Ratios
Operating Profit Margin (%) 24.42 17 24.75 22.59 21.07 18.96
Profit Before Interest and Tax Margin (%) 22.25 23.53 21.91 20.86 19.37 17.43
Gross Profit Margin (%) 22.42 23 22.33 21.22 19.69 17.72
Cash Profit Margin (%) 19.14 14.3 19.92 17.45 16.46 14.32
Adjusted Cash Margin (%) 19.14 17.23 19.92 17.45 16.46 14.32
Net Profit Margin (%) 17.22 17.29 17.37 15.79 15.16 14.07
Adjusted Net Profit Margin (%) 17.09 17.1 17.05 15.52 14.92 13.85
24.34 116.9 114.5
Return On Capital Employed (%) 18.9 104.12 95.17
8 9
Return On Net Worth (%) 18.08 16.76 83.89 78.8 74.02 69.18
Adjusted Return on Net Worth (%) 18.15 17 86.35 81.77 74.89 65.46
207.5
Return on Assets Excluding Revaluations 11.67 37.1 35.38 32.69 29.99
3
207.5
Return on Assets Including Revaluations 11.67 37.1 35.38 32.69 29.99
3
24.34 116.9 114.5
Return on Long Term Funds (%) 17 104.12 95.17
8 9
Liquidity And Solvency Ratios
Current Ratio 0.65 2.31 1.08 1 0.94 0.82
Quick Ratio 0.47 1.98 0.83 0.73 0.68 0.51
Debt Equity Ratio -- 0 -- -- -- --
Long Term Debt Equity Ratio -- - -- -- -- --
Debt Coverage Ratios
121.1 233.0 313.4
Interest Cover 88.63 368.35 280.77
3 8 6
Total Debt to Owners Fund -- - -- -- -- --
131.5 332.1
Financial Charges Coverage Ratio 300 97.48 392.25 298.77
9 8
101.4 230.3 235.2
Financial Charges Coverage Ratio Post Tax 73.42 286.75 223.09
4 3 9
Management Efficiency Ratios
Inventory Turnover Ratio 13.16 11.17 14.71 15.78 14.93 14.6
Debtors Turnover Ratio 28.60 34.15 28.53 27.11 33.28 32.02
Investments Turnover Ratio 1.05 4.31 4.83 4.99 14.93 14.6
Fixed Assets Turnover Ratio 6.47 7.03 5.64 6.98 7.09 7.38
Total Assets Turnover Ratio 14.47 0.68 5.1 5.29 5.15 5.21
Asset Turnover Ratio 1.06 5.02 4.94 5.19 5.09 4.99

Average Raw Material Holding -- - -- -- -- --

Average Finished Goods Held -- - -- -- -- --
Number of Days in Working Capital -34.35 -21.03 -22.74 -19.35 -29.49 -33.73
Profit & Loss Account Ratios
Material Cost Composition 49.11 45.18 46.18 46.95 47.22 48.69
Imported Composition of Raw Materials Consumed - - -- -- -- --
Selling Distribution Cost Composition 9.21 11.88 12.08 11.9 11.88 10.88
Expenses as Composition of Total Sales 2.98 1.12 0.72 0.84 1.12 1.69
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit 85.26 76.44 77.11 75.31 74.39 79.53
Dividend Payout Ratio Cash Profit 76.38 68.77 67.69 69.29 68.17 73.08
Earning Retention Ratio 15.06 21.9 25.08 27.42 26.48 15.96
Cash Earning Retention Ratio 23.88 33.94 34.01 33.02 32.57 23.13
Adjusted Cash Flow Times -- - -- -- -- --

Interpretation: -

Current Ratio: The company's current ratio improved and stood at 1.4x during FY22, from 1.3x
during FY21. The current ratio measures the company's ability to pay short-term and long-term
obligations.

Interest Coverage Ratio: The company's interest coverage ratio improved and stood at 113.0x
during FY22, from 91.6x during FY21. The interest coverage ratio of a company states how
easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.
Profitability Ratios: -

Return on Equity (ROE): The ROE for the company improved and stood at 18.1% during
FY22, from 16.8% during FY22. The ROE measures the ability of a firm to generate profits from
its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company improved and stood at
24.4% during FY22, from 22.5% during FY21. The ROCE measures the ability of a firm to
generate profits from its total capital (shareholder capital plus debt capital) employed in the
company.

Return on Assets (ROA): The ROA of the company improved and stood at 12.8% during
FY22, from 11.8% during FY21. The ROA measures how efficiently the company uses its assets
to generate earnings.
HUL Share Price Performance: -

Over the last one year, HUL share price has moved down from Rs 2,341.4 to Rs 2,322.0,
registering a loss of Rs 19.4 or around 0.8%.

Meanwhile, the S&P BSE FMCG Index is trading at Rs 14,093.3 (down 0.1%). Over the last one
year it has moved up from 13,130.7 to 14,093.3, a gain of 963 points (up 7.3%).
Overall, the S&P BSE SENSEX is up 9.2% over the year.
Current valuation of HUL: -

No. of Months Year Ending 12 Mar-21* 12 Mar-22*

Sales per share 200.2 223.2

Earnings per share 34.0 37.8

Diluted earnings per share 34.0 37.8

Price of Cash Flow 62.9 56.1

P/E ratio 71.4 61.4

Price / Book Value ratio 11.1 11.4

Market Capital 5,305,677 5,593,085

Dividend per share 40.5 34.0

Interpretation of Current Valuations for HUL

 The trailing twelve-month earnings per share (EPS) of the company stands at Rs
37.8, an improvement from the EPS of Rs 34.0 recorded last year.

 The price earnings ratio (P/E ratio) at the current price of Rs 2,322.0, stands at
61.4 times its trailing twelve months earnings.
 The price to book value (P/BV) ratio at current price levels stands at 11.1 times,
while the price to sales ratio stands at 10.4 times.
 The company's price to cash flow (P/CF) ratio stood at 56.1 times its end-of-year
operating cash flow earnings.
FY22 Results - HUL reported better than expected numbers
 Sales were up 10.4% YoY driven entirely by prices

 EBITDA was at Rs 3245 crore, up 9.7% YoY, with margins at 24.1%

 Consequent PAT was at Rs 2327 crore (up 8.6% YoY)
What should Investors do?

HUL’s share price has gone up by 2.3x over the past five years (from Rs 935 in
April 2017 to Rs 2144 levels in April 2022).
We expect margins to contract in FY23E on account of incessant inflation in crude,
palm oil & other important commodities.
We maintain our HOLD rating on the stock.

Target Price Valuation:-

We value HUL at Rs 2200 i.e., 55x P/E on FY24E
 REFERENCES

Below are the links which were of, immense help in completion of this project:

 https://www.hul.co.in/Images/hul-annual-report-2020-21_tcm1255-561812_1_en.pdf
 https://www.hul.co.in/Images/annual-report-2019-20_tcm1255-552034_1_en.pdf
 https://www.hul.co.in/Images/hul-annual-report-2018-19_tcm1255-538867_1_en.pdf
 https://www.hul.co.in/Images/hul-annual-report-2017-18_tcm1255-523195_en.pdf
 https://www.hul.co.in/Images/annual-report-2016-17_tcm1255-507593_en.pdf
THANK YOU