HUL Q4 Results Preview: Profit May Dip As Revenue Seen Muted On Price Cuts, Weak Demand

Hindustan Unilever Ltd. may report muted fourth-quarter earnings amid higher operational costs and sluggish demand. The company's net profit may have slipped 3.2% on muted revenue growth of 1.4% in the quarter ended March 2024, according to a consensus estimate of analysts tracked by Bloomberg.

Here's What Brokerages Say

Axis Securities

• Revenue is expected to grow moderately at 1% year-on-year (3% volume growth and 2% price cut) on account of subdued performance across categories.

• Ebitda margin is likely to remain flat owing to higher ad spends, higher royalty payments, and an offsetting gross margin expansion of 410 basis point YoY.

• Key Monitorable: Demand outlook on rural vs. urban; competitive intensity; raw material trends

Nuvama Institutional Equities

• HUL's Q4FY24 revenue is expected to grow 1% YoY and dip 1% QoQ at Rs 14,784.4 crore, while Ebitda and net profit are expected to dip 2% and 4% over last year to Rs 3,400 crore and Rs 2,458.1 crore, respectively.

• Volumes are expected to grow by 3% over Q4 FY23, driven by a 2% dip in prices. 

• Demand trends are expected to be similar to Q3 FY24, with marginal improvement in rural (across categories) on a two-year basis.

• For HUL, urban continues to grow faster than rural, while premium continues to do better than mass.

• The Ebitda margin is expected to decrease by 70 basis points year-on-year due to the high A&P and the second round of increases in royalty. GSK consignment arrangement expiry is likely to have a Rs 60–75 crore impact on operating income.

Motilal Oswal

• HUL's wide product basket and presence across price segments should help the company achieve a steady growth recovery.

• There is scope for a turnaround in parts of beauty and personal care (BPC) and food and refreshment (F&R). The execution of these segments under the new CEO will be monitored.

• HUL's valuation at 45x FY26E earnings per share is reasonable given its last five-year average price-to-earnings of 65x on one year forward.

• Volume growth has bottomed out and anticipates a gradual volume recovery in the financial year 2025.

• Expects HUL to post a profit of Rs 2,507.6 crore, Ebitda of Rs 3,542 crore, and sales of Rs 15,363.9 crore in the March quarter.

Kotak Institutional Equities

• Home care segment to grow at 0.3% YoY, while BPC growth to be flat owing to anniversarisation of some price cuts in soaps; delayed onset of winter (30% of skincare portfolio) would have benefited offtakes and helped clear some channel inventory. F&R is expected to grow by 1.2%.

• Expects a 70% decline in other operating income over the previous year due to the discontinuation of GSK Consumer Healthcare's over-the-counter distribution business in November 2023.