HUL Q3 preview: How much will net profit, revenue jump, what will hit margins, what are investors watching | The Financial Express

HUL Q3 preview: How much will net profit, revenue jump, what will hit margins, what are investors watching

HUL will report its Q3 earnings numbers on 19 January, Thursday. HUL shares have jumped more than 5% in the last six months. The stock was last trading at Rs 2,686 on NSE.

HUL Q3 results, HUL, HUL earnings
HUL’s CEO Sanjiv Mehta had said after company's Q2 results that the FMCG market continued to remain “challenging”. (Image: Reuters)

Hindustan Unilever (HUL), India’s biggest fast moving consumer goods (FMCG) company, is expected to post double-digit growth in topline for the quarter ended December 2022 quarter. However, its operating margins are expected to fall on-year due to increasing advertising spends, according to analysts. HUL is scheduled to report its quarterly earnings numbers on Thursday, 19 January. Brokerages see 8-12% on-year growth in profit (PAT), while revenue growth is seen at 12-16% on-year, led by beauty & personal care, home care segments sales, price hikes in detergents, analysts noted. HUL shares have jumped more than 5% in the last six months. The stock was last trading at Rs 2,686 on NSE.

Double-digit sales growth likely as HUL hiked prices

Brokerage firm ICICI Securities estimates HUL‘s sales growth at 12.6% largely led by pricing growth. “We estimate 5% volume growth & 7% pricing growth during the quarter. Home care is expected to witness 23% sales growth given the company has taken price hikes in the last one year. Further, detergent has continued to see strong volume growth,” it said, adding that the beauty & personal care segment is estimated to post 5.3% sales growth as the FMCG major has passed on benefits of palm oil price decline in terms of price cuts in soaps in October 2022.

HUL’s soaps segment may see volume growth

HUL’s food & refreshment segment is expected to see a growth of 2.3%, mainly on account of price deflation in the tea segment. “We expect gross margin contraction of 392 bps on-year, but 240 bps improvement sequentially. Operating margins are expected to contract by 82 bps during the quarter. We estimate net profit growth of 12.3% to Rs 2519.2 crore,” analysts at ICICI Securities. Price cuts of 5-11% were taken in Lifebuoy and Lux soaps after a fall in palm oil prices, which is expected to drive volume growth in soaps in Sep-Dec 2022 quarter.

HUL’s Gross Margins may see some respite

Kotak Securities expects continued strength in home care revenue growth on the back of price hikes in the laundry segment. Note that HUL is the maker of Surf Excel, Rin, Wheel, and Breeze in this segment. Slight improvement in underlying (3-yr CAGR) beauty & personal care growth is seen despite price cuts in skin cleansing and late onset of winter. Gross margins are expected to witness some respite due to softening of crude, palm oil. “We build in 23.5% EBITDA margin, down 155 bps on-year as inflationary pressures are mitigated through operating leverage on other expenses while maintaining A&P intensity at 8.8% of sales (vs 9.1% in 3QFY22),” it said.

Key things to watch from HUL Q3 Results

Demand outlook on rural vs urban
Competitive intensity
Management commentary on Raw material trends
Pricing actions and new launches strategy
Sustainability of cost-saving initiatives
Improvement in rural business
Commentary on Out Of Home (OOH) and discretionary categories

Hindustan Unilever (HUL) Q3 earnings estimates

HDFC Securities

Net Sales: Rs 14930 crore, 14.1% on-year
EBITDA: Rs 3510 crore, 7.1% on-year
EBIT margin: 23.5%
APAT: Rs 2,490 crore, 8.7% on-year

Axis Securities

Revenue: Rs 14,720 crore, 12.4% on-year
EBITDA: Rs 3,473 crore, 5.9%
EBIT Margin: 23.6%
PAT: Rs 2,437 crore, 6.3% on-year

Philip Capital

Revenues: Rs 15,035 crore, 16.6% on-year
EBITDA: Rs 3,589 crore, 9.5% on-year
EBIT margin: 23.9%
PAT: Rs 2,527 crore, 10.3% on-year

Kotak Securities

Revenues: Rs 14,904 crore, 13.8% on-year
EBITDA: Rs 3,279 crore, 6.9% on-year
EBIT margin: 25%
PAT: Rs 2,292 crore, 8.3% on-year

ICICI Securities

Revenue: Rs 14,743 crore, 12.6% on-year
EBITDA: Rs 3,567.6 crore, 8.8% on-year
EBIT Margin: 25%
PAT: Rs 2,519 crore, 12.3% on-year

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First published on: 18-01-2023 at 12:26 IST