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Nirmal Bang Report
Hindustan Unilever Ltd.'s. Q2 FY24 results were weaker than expected on volume front (2% YoY versus 3% expected), but Ebitda margin surprised positively, partly led by one-offs and improved gross margin. Outlook is however cautious with volumes likely to recover more gradually than earlier expectations, likelihood of price impact moving to negative territory and uncertainties about commodity costs amid crude spike and geopolitical worries. T
herefore, we expect Ebitda growth over the next six months to be muted.
Changes to the model have affected earning per share forecasts for FY24E/FY25E by 3-5% partly because of muted sales recovery and higher-than-expected tax rates.
We had downgraded HUL to 'Accumulate' after Q1 FY24 results as we believed that FY24 appeared to be the third consecutive year of relatively lower EPS compared to mid-teens growth of the past.
We maintain our view as H2 FY24 earnings recovery remains unclear.
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