Group-

8​

Ratio Analysis of
Hindustan Unilever
(HUL)​
Table of contents
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1 2 3
Company
Introduction Ratios
Overview

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4 5
Industry
References
Comparison

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Introduction
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Introduction
Definition
Ratio analysis is a quantitative method. It reveals insight into a company's liquidity
and profitability. ​
​
Purpose
It evaluates financial performance. It analyzes financial statements like balance
sheets and income statements.

Users
Investors and creditors use ratio analysis. Management and other stakeholders also
use it.​
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Benefits of Ratio Analysis​
Comprehensive View
​It provides a comprehensive view of financial health. This helps in understanding
the company's strengths and weaknesses.​

Trend
​ Identification​
Ratio analysis helps identify financial trends. This can reveal potential problems
early on.​

Benchmarking​
It facilitates comparison with industry benchmarks. It also allows comparison with
competitors in the same sector.​
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—Ratio Analysis: Pros & Cons​
Benefits Limitations

● Simplifies complex financial data​ ● Based on historical data​

● Facilitates comparison​ ● Affected by accounting policies​

● Provides insights​ ● Requires careful interpretation​

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0 COMPANY
2 OVERVIEW​

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Introduction​
Hindustan Unilever Ltd was incorporated on 17 October 1933 as Lever Brothers
India Ltd. In 1956, Hindustan Vanaspati Mfg. Co. Ltd. and United Traders Ltd
merged with the company and the name was changed from Lever Brothers Ltd to
Hindustan Lever Ltd. Hindustan Unilever Limited (HUL) is India's largest Fast-
Moving Consumer Goods company with its products touching the lives of nine out
of ten households in the country. The company is the part of the everyday life of
millions of consumers across India. ​
Key Products/Brands​
The Company is in the fast-moving consumer goods (FMCG) business, primarily
comprising four business segments: home care, personal care, foods, and
refreshments. Soaps and detergents include soaps, detergent bars, detergent
powders etc. Personal products include skin care (excluding soaps), hair care,
talcum powder, and color cosmetics. Beverages include tea and coffee. Foods
include staples (atta, salt, and bread) and culinary products (tomato- based
products, fruit-based products, and soups). Ice creams and frozen desserts.
8/ Shubham Dhargalkar​​
Market Valuation Ratios​
Market valuation ratios are financial metrics used to evaluate a company's stock
price relative to its financial performance, helping investors determine if a stock is
overvalued, undervalued, or fairly priced.​

Earnings Per Share (EPS)​​

EPS measures the profitability allocated to each outstanding share.​

EPS = Net Profit (PAT)

NO. OF SHARES OUTSTANDING
​ FY22​ FY23​ FY24​
NET PROFIT (PAT)​ 8,892 ​ 9,962​ 10,107​
NO. OF 235.95​ 235.95​ 235.95​
SHARES OUTSTANDING​
EPS ​ 37.68​ 42.22​ 42.83​
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Price-to-Earnings (P/E) Ratio​
This ratio reflects investor expectations of future earnings growth.​

P/E Ratio = MARKET PRICE PER SHARE

Earnings Per Share (EPS)

Market Price P/E P/E
Fiscal Year​ EPS (₹)​
per Share (₹)​ Ratio Calculation​ Ratio (Approx.)​

FY22​ 2,200​ 37.68​ 2,200 / 37.68​ 58.38​

FY23​ 2,400​ 42.22​ 2,400 / 42.22​ 56.84​
FY24​ 2,500​ 42.83​ 2,500 / 42.83​ 58.37​

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RATIOS
3

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Solvency Ratio​
A solvency ratio is a key financial metric that assesses a company's ability to meet
its long-term debt obligations. Essentially, it indicates whether a company can pay
its debts that are due over a longer period.​​

Debt to Equity Ratio

Interest Coverage Ratio

Financial Leverage Ratio

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Debt to Equity Ratio​
The debt-to-equity (D/E) ratio is a financial metric that shows how much debt
is used for every rupee of equity.​

D/E = Total Debt

Total Equity

​
2022​ 2023​ 2024​

Total Debt (Cr)​ 100 ​115 127​

Total Equity (Cr)​ 49061​ 50304 51218​

Debt to Equity (%)​ 0.2 0.22 .0247​

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Interest Coverage Ratio​
The interest coverage ratio is a crucial financial metric that Measures ability to pay
interest on outstanding debt.​

ICR = EBIT
Interest Expense
​
2022​ 2023​ 2024​

EBIT (Cr) 12,024 13,523 14,258

Interest Expense (Cr) 106 114 334

Interest Coverage 113 118 42.69

Ratio Aman Fandan-18
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Financial Leverage Ratio
The financial leverage ratio is a crucial metric that Indicates how much assets are​
financed by shareholders equity.​

FL= Total Assets

Total Equity

​
2022​ 2023​ 2024​

Total Assets (Cr) 70,506 73,077 78,489

Total Equity (Cr) 49,061 50,304 51,218

Financial Leverage 1.43 x 1.45 x 1.53 x

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Activity Ratio​
Activity ratios, also known as efficiency ratios, are financial metrics that provide
valuable insights into how effectively a company utilizes its assets to generate
revenue. In essence, they measure how well a company manages its resources.​

Inventory Turnover ratio​

Asset Turnover ratio

Working Capital ratio​

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Inventory Turnover Ratio

The inventory turnover ratio is a crucial financial metric that measures how
efficiently inventory is sold and replaced.​

ITR = COGS
Inventory
​
2022​ 2023​ 2024​

COGS (Cr) 22,871 28,427 26,822

Inventory (Cr) 3,641 3,786 3,624

Inventory Turnover Ratio 6.28 x 7.46 x 7.4 x

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Asset Turnover Ratio

The asset turnover ratio is a financial metric that assesses how effectively assets
generate sales or revenue. assets it holds.​

ATR = Net Sales

Total Assets

​
2022​ 2023​ 2024​

Net Sales 52,446 60,580 61,896

Total Asset 70,872 72,987 78,349

Asset Turnover Ratio 0.74 x 0.83 x 0.79 x

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Working Capital Turnover
The working capital ratio, also known as the current ratio, is a liquidity ratio that
indicates how efficiently working capital supports revenue generation.

WCT = Net Sales

Net WC

​
2022​ 2023​ 2024​

Net Sales (Cr) 52,446 60,580 61,896

Net Working Capital 4,229 6,459 8,436

WC Turnover 12.4 x 9.37 x 7.33 x

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Profitability Ratio​
Profitability ratios are a type of accounting ratio that helps in determining the
financial performance of business at the end of an accounting period. Profitability
ratios show how well a company is able to make profits from its operations.​​

Return on Assets

Return on Equity​

Return on Capital Employed​

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Return on Assets​
This ratio indicates how well a company is
performing by comparing the profit (net
income) it’s generating to the total
capital it has invested in assets. The
higher the return, the more productive
and efficient the management is in
utilizing economic resources.​

​
2022​ 2023​ 2024​

Net Income (Cr)​ 8,879​ 10,120​ 10,277​

Total Assets (Cr)​ 70,506​ 73,077​ 78,489​

Return on Assets 12.59​ 13.85​ 13.09​

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(%)​ 21/
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Return on Equity​
Return on equity is a measure
of a company’s annual
return (net income) divided
by the value of its total
shareholders’ equity,
expressed as a percentage​

​
2022​ 2023​ 2024​

Net Income (Cr)​ 8,879​ 10,120​ 10,277​

Shareholders' Equity 49,061 50,304​ 51,218​

(Cr)​

Return on Assets (%)​ 18.10​ 20.12​ 20.07 Vanraj Chauhan

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Return on Capital Employed​
Return on Capital Employed (ROCE)
is a profitability ratio that
measures how efficiently a
company is using its capital to
generate profits.​

​ 2022​ 2023​ 2024​

EBIT (Cr)​ 12,024​ 13,523​ 14,258​
Total Assets (Cr)​ 70,506​ 73,077​ 78,489​
Current Liabilities (Cr)​ 11,280​ 12,028​ 12,876​
Capital 59,226​ 61,049​ 65,613​
Employed (Cr)​
Vanraj Chauhan
Return on Equity (%)​ 20.30​ 22.15​
23/37 21.73​
Liquidity Ratios​
Liquidity ratios are used by financial analysts to evaluate the financial soundness of
a company. These ratios measure a company’s ability to repay both short-term and
long-term debt obligations. Liquidity ratios are often used to determine the
riskiness of a firm to decide whether to extend credit to the firm. ​

Current Ratio​

Quick Ratio​

Cash Ratio​

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Current Ratio​
The current ratio, otherwise known as the working capital ratio, measures the
ability of a business to meet its short-term obligations that are due within a
year. The ratio compares total current assets to total current liabilities.​

​
2022​ 2023​ 2024​

Current Assets (Cr)​ 15,509​ 16,986​ 21,312​

Current 11,280​ 12,028​ 12,876​

Liabilities (Cr)​
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Current Ratio (x)​ 1.37​ 1.41​
37 1.66​
Quick Ratio​
The quick ratio, also known as the acid-test ratio, measures the ability of a
business to pay its short term liabilities by having assets that are readily
convertible into cash. These assets are cash, marketable securities, and
accounts receivable. These assets are considered “quick” assets because they
can be quickly and easily converted into cash.​

​
2022​ 2023​ 2024​

Liquid Assets (Cr)​ 11,413​ 12,735​ 17,290​

Current 11,280​ 12,028​ 12,876​

Liabilities (Cr)​ Vanraj Chauhan
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Quick Ratio (x)​ 1.01​ 1.06​
37 1.34​
Cash Ratio​
Measures a company’s ability to pay off its short-term debt obligations with cash
and cash equivalents. Compared to the current ratio and the quick ratio, the
cash ratio is a stricter, more conservative measure because only cash and
cash equivalents – a company’s most liquid assets – are considered.​

​ 2022​ 2023​ 2024​

Cash and Cash Equivalents 3,846​ 4,678​ 7,559​
(Cr)​

Current Liabilities (Cr)​ 11,280​ 12,028​ 12,876​

Vanraj Chauhan
Cash Ratio(x)​ 0.34​27/37 0.39​ 0.59​
Cash Flow Ratios​
These ratios are super important because they show a company's ability to
generate cash and meet its obligations, beyond what the income statement might
reveal.​
Operating Cash Flow Ratio​

Cash Flow Coverage Ratio

Cash Flow to Sales Ratio

Free Cash Flow to Net Income​

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Operating Cash Flow Ratio​
It measures a company’s ability to cover its current liabilities with the cash flow
generated from operations. It shows whether a company generates enough
cash to pay off its short-term debts.​
Operating Cash Flow
Operating Cash Flow Ratio =
Current Liabilities

​ 2022​ 2023​ 2024​

Operating Cash Flow 9,048​ 9,991​ 15,469​
(Cr)​
Current Liabilities (Cr)​ 11,280​ 12,028​ 12,876​
Operating Cash 0.80​ 0.83​ 1.20​
Flow Ratio (%)​ Gauri Dhamapurkar
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Cash Flow Coverage Ratio​
It measures how well-operating cash flow can cover total debt obligations, helping
assess long-term financial health and solvency.​
Operating Cash Flow
Cash Flow Coverage Ratio =
Total Debt

​ 2022​ 2023​ 2024​

Operating Cash Flow 9,048​ 9,991​ 15,469​
(Cr)​
Current Liabilities (Cr)​ 11,280​ 12,028​ 12,876​
Operating Cash Flow 0.80​ 0.83​ 1.20​
Gauri Dhamapurkar
Ratio (%)​ 30/37
Cash Flow to sales Ratio​
Measures a company’s ability to pay off its short-term debt obligations with cash
and cash equivalents. Compared to the current ratio and the quick ratio, the
cash ratio is a stricter, more conservative measure because only cash and
cash equivalents – a company’s most liquid assets – are considered.​
Operating Cash Flow
Cash Flow Coverage Ratio =
Total Debt
​
2022​ 2023​ 2024​
Operating Cash Flow (Cr)​ 9,048​ 9,991​ 15,469​
Total Debt (Cr)​ 10,139​ 10,527​ 14,190​
Cash Flow Coverage 0.89​ 0.95​ 1.09​
Ratio (%)​ Gauri Dhamapurkar
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Free Cash Flow to Net Income​
Measures a company’s ability to pay off its short-term debt obligations with cash
and cash equivalents. Compared to the current ratio and the quick ratio, the
cash ratio is a stricter, more conservative measure because only cash and
cash equivalents – a company’s most liquid assets – are considered.​
Operating Cash Flow
Free Cash Flow to Net Income Ratio =
Total Debt
​
2022​ 2023​ 2024​
Operating Cash Flow (Cr)​ 9,048​ 9,991​ 15,469​
Total Debt (Cr)​ 10,139​ 10,527​ 14,190​
Free Cash Flow to Net 0.89​ 0.95​ 1.09​
Income Ratio(%)​ Gauri Dhamapurkar
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0 Industry
4 Comparison

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HUL vs. FMCG Industry
Benchmarking​
Metric​ HUL (FY 2023-24)​ Industry Average (FY
2023-24)​
Revenue Growth (%)​ 6.5%​ 5.2%​
Net Profit Margin (%)​ 16.8%​ 12%​
Return on Equity (ROE)​ 20%​ 15%​
Return on Assets (ROA)​ 18%​ 14%​
Current Ratio (x)​ 1.7​ 1.5​
Debt-to-Equity Ratio​ 0.6​ 0.5​
Asset Turnover Ratio​ 2.3​ 2.0​
EBITDA Margin (%)​ 24.5%​ 20%​
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HUL vs. FMCG Industry​

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Reference
s
https://www.screener.in/company/HINDUNILVR
https://www.etmoney.com/​
Hindustan Unilever Ltd. | Tijori Finance​

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Thanks!
Team Members​

13. Prince Buswala​

14. Vanraj Chauhan​
15. Eesha Deshpande ​
16. Gauri Dhamapurkar​
17. Shubham Dhargalkar​
18. Aman Fandan​
​

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