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Dolat Capital Report
Hindustan Unilever Ltd.'s core business registered 16% sales growth in Q2 FY23 led by ~12% price increase and volume growth of 4%.
Home care segment posted 34% revenue growth with three-year compound annual growth rate of 15%. The growth was led by double digit volume growth and calibrated price hikes during the quarter.
However, 170 basis points contraction in the segmental margin was due to high inflation.
Increase in raw material prices and delayed/restrictive price pass on resulted in 580 bps contraction in gross margin. However, better operating efficiency helped restrict operating profit margin contraction at 170 bps.
Recent softening in select commodity prices is likely to benefit HUL in H2 FY23E. The company expects the gross margin to improve sequentially going ahead, but it would remain lower in YoY basis.
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