HUL Q3 Results Review - Core Performance To Improve Here On: Dolat Capital

Increase in royalty would pressurise Ebitda margins, going ahead.

<div class="paragraphs"><p>HUL products. (Photo: BQ Prime)</p></div>
HUL products. (Photo: BQ Prime)

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Dolat Capital Report

Hindustan Unilever Ltd.’s results came inline with estimate. Core business registered 16% sales growth in Q3 FY23 led by ~11% price increase and volume growth of 5%.

Personal care segment reported mere 11% revenue growth due to delayed monsoon. Going ahead, we believe that the segment would bounce back in Q4 and post improvement.

Increase in raw material prices and delayed/restrictive price pass on resulted in 460 basis points contraction in gross margin.

However, better operating efficiency helped restrict operating profit margin contraction at 180 bps. Recent softening in select commodity prices is likely to benefit HUL in the ensuing quarters. However, increase in royalty would pressurise Ebitda margins, going ahead.

We have marginally tweaked our FY24/25E earnings per share estimates to factor in positive impact of expected improvement in gross margin but negative impact of increase in royalty.

Click on the attachment to read the full report:

Dolat Capital Hindustan Unilever Q3FY23 Result Update.pdf
HUL Q3 Review - Surprise Royalty Increase To Offset The Tailwinds From Positive Mgmt Commentary: Systematix


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