HUL Q4 Results Review: Shares Fall As Brokerages Flag Margin Pressure
HUL's consolidated fourth-quarter net profit rose 13% YoY to Rs 2,600 crore, versus a Bloomberg estimate of Rs 2,609.67 crore.
Hindustan Unilever Ltd.'s shares declined after brokerages cut the target price on the stock, citing margin pressure and a delay in volume recovery.
The consolidated net profit of HUL rose 13% over the preceding year to Rs 2,600 crore in the quarter ended March, according to its exchange filing. That compares with the Rs 2,609.67-crore consensus estimate of analysts tracked by Bloomberg.
HUL Q4 FY23 Highlights (YoY)
Revenue up 11% to Rs 15,215 crore, against the Rs 15,253.65 crore forecast.
Operating profit rose 8% to Rs 3,574 crore, against the projected Rs 3,632.77 crore.
Margin stood at 23.5% against 24%. Analysts had pegged it at 23.8%.
Cost of materials consumed rose 9% to Rs 4908 crore. It, however, dipped marginally on a sequential basis for the first time in many months.
Advertising spends rose 1.15% to Rs 1,311 crore. It's 8.4% higher than the previous quarter.
Shares of the company declined 0.47% to close at Rs 2,457.30 per share compared to a 0.84% gain in the benchmark Nifty 50.
Of the 35 analysts tracking the stock, 16 maintain a 'buy,' seven suggest a 'hold,' and one recommends a 'sell,' according to Cogencis data.
What analysts have to say about HUL Q4 results:
Jefferies
Maintains 'buy' rating and cuts the price target to Rs 2,875 from Rs 3,100.
The key disappointment was lower-than-estimated volume growth of 4%.
Expects stock to stay range-bound in the near term unless it sees signs of growth picking up.
Lowers EPS estimates by 1-2% to factor in the Q4 miss.
Expects lower pricing growth due to muted revenue growth in the coming quarters.
Sees gradual gross margin recovery, but it would be reinvested in ad spends.
The company focuses on driving growth and market share.
Morgan Stanley
Maintains 'equal-weight' rating and cuts the price target to Rs 2,408 from Rs 2,497, implying a potential downside of 2%.
Expects 7.3% topline growth in fiscal 2024.
Lowers FY24 and FY25 earnings estimates by 5% each.
Lowers FY24 and FY25 Ebitda margins by 50–60 basis points to factor in higher A&P spends.
Predicts 5.5–6% volume growth as pricing growth comes into play and price cuts are taken in a few categories.
Builds in 10% topline growth each in fiscals 2025 and 2026.
Expects Ebitda margins to be flat in FY24 and improve gradually thereafter.
Earnings missed house and consensus estimates by 5–6%.
A high base on home care, pricing actions in various categories, and market development plans may weigh on growth and margins.
Macquarie Research
Keeps 'outperform' rating and cuts the target price by 3% to Rs 2,950, implying 18.5% upside.
Near-term sales growth will be dragged down by a gradual volume recovery.
Cuts FY24 and FY25 earnings per share by 3% each to factor in Q4 misses and the gradual pace of Ebitda margin expansion.
Gross margin expansion to be invested in ad spends.
Rural lags urban, albeit with weakness bottoming out.
Weather issues and elevated input costs remain growth concerns.
Credit Suisse
Maintains 'outperform' rating and cuts the target price to Rs 2,850 from Rs 2,950.
A sequential dip in volume growth with moderate pricing was unexpected.
The volume increase appears to be delayed.
Expects moderate revenue growth in the near future.
Account for near-term sluggishness in volumes.
Adjusts fiscal 2024 and 2025 EPS by 1-2%.
Rural growth improved sequentially but is not out of the woods yet.
Nirmal Bang
Maintains 'buy' rating and cuts the target price to Rs 3,020 from Rs 3,230, implying a potential upside of 22.3%.
Realisation growth is likely to moderate even as volume recovery is gradual.
Sales growth is likely to be under pressure over the next two quarters.
Expects moderating net material inflation to improve margins.
Lowers fiscal 2024 and 2025 EPS estimates by 6.6% and 3.9%, respectively.
Currently, we are building in about 15.2% earnings CAGR over fiscal 2023 through 2025.
