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    HUL Q3 Preview: Revenue likely to grow in double-digits; margins to take a hit

    Synopsis

    Axis Securities pegged HUL's revenue at Rs 14,720 crore for the third quarter, reflecting a growth of about 12% year-on-year (YoY). HUL posted revenues of Rs 14,751 crore in the second quarter and Rs 13,092 crore in the same quarter last year. This revenue growth will be largely driven by Beauty and Personal Care Segment, Home Care, and price hikes in detergents.

    HUL Q3 Preview: Revenue likely to grow in double-digits; margins to take a hitET Bureau & Agencies
    India's largest fast-moving consumer goods company Hindustan Unilever (HUL) is expected to record double-digit revenue growth for the third quarter of the financial year 2022-23, according to various analyst estimates.

    However, volume growth is likely to be muted in single digits and gross margins will take a hit year-on-year (YoY) mainly due to inflationary pressures during the period under
    review. HUL will come out with its earnings card tomorrow.

    On Wednesday, ahead of the results, HUL closed marginally higher at Rs 2,684 on NSE. So far this year, HUL has risen nearly 5%, compared with a gain of 0.99% in the BSE FMCG index and a fall of 0.20% in Sensex.

    Some key monitorables in the earnings include the demand outlook of rural and urban areas, competitive intensity, raw material trends, out-of-home (OOH) demand, and discretionary categories.

    Here's what analysts expect from the consumer giant in Q3:

    Axis Securities
    Axis Securities pegged HUL's revenue at Rs 14,720 crore for the third quarter, reflecting a growth of about 12% year-on-year (YoY). HUL posted revenues of Rs 14,751 crore in the second quarter and Rs 13,092 crore in the same quarter last year. This revenue growth will be largely driven by Beauty and Personal Care Segment, Home Care, and price hikes in detergents. The brokerage expects profit to grow by 6% to Rs 2,437 crore for the December quarter. EBITDA margins will likely remain under pressure, compared with the previous year, owing to higher advertising spending and inflationary pressures.

    Kotak Institutional Equities
    The brokerage expects the revenue to increase by 13.8% YoY with 4% growth. Kotak expects continued strength in home care revenue growth on the back of price hikes in laundry and a slight improvement in the underlying BPC segment despite price cuts in skin cleansing and the late onset of winter. Segment-wise, analysts estimate 28% YoY growth in Home care, 6.8% YoY growth in BPC business, and 7% YoY revenue growth in the F&R portfolio. Sequentially, Kotak expects margins to expand 170 basis points, led by a correction in crude and palm oil prices. However, when compared with the previous year, margins are likely to be down 155 basis points at 23.5%.

    Motilal Oswal
    Motilal Oswal sees domestic volume growth at 5%, while the gross margins are expected to contract 500 basis points YoY, led by higher raw material costs. Analysts at the brokerage see some of the key monitorables as outlooks for a discretionary category and out-of-home demand.

    Nomura
    The brokerage pegged revenue growth at 15.1% during the December quarter, while volume growth is expected to be in the single digits at 5%. Nomura expects the operating profit to come in at Rs 3,444 crore, an increase of 5% from the year-ago period. According to the brokerage, the adjusted profit after tax (PAT) is likely to see a growth of 6% at Rs 2,435 crore for the quarter under review.

    (Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of the Economic Times)



    ( Originally published on Jan 18, 2023 )
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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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