HUL Q4 Results Review - Expect Margin Improvement Going Ahead: Dolat Capital

Dolat Capital Report

Hindustan Unilever Ltd.’s revenue and Ebitda came below but adjusted profit after tax was in line with estimate. Core business registered 11% sales growth in Q4 FY23 led by ~6% price increase and volume growth of 4%.

Food and refreshment business reported lower growth as-

1. health drinks portfolio was impacted due to high inflation,

2. tea remained impacted due to down trading majorly led by inflation and

3. ice creams were impacted due unfavorable variation in season.

As most of the commodities have softened compared to last year, gross margin contraction has eased to 80 basis points (versus 460 basis points in Q3 FY23).

Going ahead, we believe that with more softening in commodity prices the Ebitda margin gain story would continue for HUL.

We have marginally tweaked our FY24/25E earnings per share estimates to factor in Q4 performance. Going ahead, we believe that HUL’s margins would improve with easing of inflation.

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