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Axis Securities Report
Hindustan Unilever Ltd. delivered a resilient performance ahead of our and street expectations on key performance metrics. Reported sales grew by 19% YoY (volume growth of 6% YoY) to Rs 14,016 crore mainly driven by price hike/mix, market share gains and strong double-digit growth in home care and beauty and personal care portfolio.
HUL's gross margins declined ~330 basis points to 46.4% largely owing to hyperinflation across the key raw material basket as expected (net material inflation was 20% YoY in Q1 FY23).
Ebitda margin declined by 110 bps to 23.2% despite gross margin pressure as the company undertook rationalisation in employee cost (down 3% YOY) and targeted other cost efficiency measures (up only 4% YoY).
It expects inflation in raw material to continue till Q2 FY23 on account of consumption of high-cost raw material inventory and rupee depreciation.
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