Hindustan Unilever Q1 results: Profit may rise 12-14% YoY; volume growth likely at 5%

Hindustan Unilever Ltd (HUL) is likely to report in 12-14 per cent year-on-year (YoY) jump in net profit for the June quarter on an 8-9 per cent rise in sales. Margin is seen expanding both sequentially and on year-on-year basis due to a correction in the input prices and better mix amid calibrated price hikes. The underlying volume growth for the quarter seen above 5 per cent.

On a standalone basis, Kotak Institutional Equities is expecting 13.6 per cent year-on-year (YoY) rise in net profit at Rs 2,599.80 crore compared with Rs 2,289 crore in the same quarter last year. It is pencilling in a 9.1 per cent YoY rise in revenue at Rs 15,573.60 crore. This would, though, be lower than 10.6 per cent growth YoY growth in the March quarter. The underlying volume growth (UVG) is pegged at 5.5 per cent YoY against 4 per cent in the March quarter and 5 per cent in the December quarter.

"We expect moderation in HC growth to 12 per cent (versus 18.7 per cent in Q4) due to price cuts taken in laundry portfolio, slight moderation in BPC to 8.5 per cent (versus 10.1 per cent in Q4) owing to price cuts in soaps, and some improvement in F&R growth to 7 per cent (versus 2.6 per cent in Q4). We expect high inflation to weigh on demand in HFD (exacerbated by dairy inflation) and tea (consumer downtrading). Steep price cuts across laundry/skin cleansing could result into lower channel inventory, impacting HUL's wholesale sales to some extent," it said.

The Ebitda margin is seen at 23.5 per cent against 23.3 per cent in March and 23.3 per cent in the year-ago quarter.

Sharekhan pegs HUL's Q1 profit at Rs 2,584 crore, up 12.5 per cent YoY. It sees sales at Rs 15,508 crore, up 8.7 per cent. This brokerage expects HUL to log an operating profit margin of 23.4 per cent, up 67 basis points YoY.

Phillip Capital said HUL may see 5 per cent volume growth, owing to mean reversion for BPC care business, premiumisation trends for detergent and high-single digit price hike in the Nutrition business. It said gross margin may improve sequentially owing to correction in PFAD price and calibrated price hikes.

"Ebitda margin to see moderate expansion despite benign RM costs, owing to higher royalty payments," it said while estimating profit at Rs 2,615 crore, up 14.2 per cent. This brokerge sees Ebitda margin at 24 per cent.

"HUL to post UVG of 5.5 per cent YoY (4-year CAGR: 3 per cent), leading to 8.5 per cent YoY revenue growth. We expect gross margin to improve by 80 bps QoQ (up 210 bps YoY) as net material inflation (NMI) has moderated sequentially, resulting in ebitda margin expansion of 70 bps YoY to 23.5 per cent. EBITDA and adjusted PAT are likely to grow by 12 per cent YoY and 14.4 per cent YoY, respectively," YES Securities.

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