Compass: Peppy sales, margins so dented at HUL

Higher input costs have hurt profits but adspends at 10.4 per cent of sales are in line with the average for the last nine quarters. Given the competition, it's unlikely that HUL's adspends will come off in the near future. While the general slowdown in the economy may not impact the company too much, what could could pose problems for it is a poor monsoon in some parts of the country. Rural sales are important for HUL and, any fall in demand in those markets, would hurt.

The stock has been an outperformer since the start of 2008, in a weak market, and at the current price of Rs 232 trades at just under 25 times estimated CY08 earnings. That's still expensive given that earnings are unlikely to grow by more than 17-18 per cent in the next couple of years.