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Anantharaman Muralikumar
Mumbai, Feb 14: Consumer products firm Hindustan Lever Ltd (HLL) is expected to deliver a strong performance for 1998, driven by growth in some product lines and exports, according to analysts.
Analysts' estimates for net profit range from Rs 776.4 crore to Rs 839 crore ($183 million to $197.6 million), including the net profit for Pond's India Ltd which is being merged with HLL.
HLL and Pond's are subsidiaries of Anglo-Dutch conglomerate Unilever Plc. The combined results will be unveiled on February 15.
"The growth story of HLL continues relentlessly," said Rajat Sabharwal, analyst at Kotak Securities, the Indian affiliate of Goldman Sachs. "In 1998 it was led by sales growth of over 22 per cent and margin expansion by 1.4 per cent," he added.
HLL posted a net profit of Rs 580 crore and profit after exceptional items of Rs 560 crore in 1997 while sales totalled Rs 7,820 crore.
Pond's recorded a net profit of Rs 61.11 crore and sales of Rs 470 crore in 1997.
The merged HLL's main product rangeincludes soaps, detergents, tea and personal care products like toothpaste, shampoo and skin creams. The firm also has food products and chemicals in its portfolio.
"The growth will be led by stellar showing of high-margin personal care products and a 50 per cent jump in exports of HLL and its subsidiaries," said Atul Rastogi, analyst at UTI Securities. HLL recorded exports of Rs 70.63 crore in 1997. Rastogi said higher average tea prices and HLL's thrust on rural markets, especially in personal care products, in a year of higher agricultural growth would have boosted the performance.
India has estimated a 5.3 per cent growth in agricultural and allied sectors in 1998/99 (April-March) compared to a fall of 1 per cent in 1997-98. HLL shares had risen almost eight per cent or Rs 147.5 to Rs 2,030 by Friday afternoon -- from Tuesday's closing when the company announced the date for 1998 results. Analysts see the share rising further. "The valuations are completely justified and HLL deserves to trade at apremium to other consumer products companies because it will continue to grow," said Kotak Securities' Sabharwal.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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