Analysts noted that domestic consumer demand remained muted in Q4, in line with past two quarters. This is even as rural demand saw some pick-up on a low base.
Sharekhan expects HUL profit to rise 0.7 per cent YoY to Rs 2,489 crore.
Hindustan Unilever Ltd (HUL) is likely to report up to 5 per cent decline in net profit for the March quarter on a flattish growth in sales. Volume growth is seen at 2-2.5 per cent. Margin is seen contracting by at least 50 basis points on both YoY and QoQ basis.
Analysts noted that domestic consumer demand remained muted in Q4, in line with past two quarters. This is even as rural demand saw some pick-up on a low base. Emkay Global said the demand setting in Q4FY24 stayed unchanged to levels seen in Q2 and Q3. HUL is likely to see flat sales and a volume growth of 2.5 per cent that should be offset by negative price growth of 2.5 per cent, Emkay said.
“With GSK-related commission income going away and an increase in royalty (25 bps from January 2024; impact to be higher in Q4 given a 45 bps hike in royalty was effective February 2023 in base), the margin is likely to have an 80-90bps impact. The company will partially use gross margin to negate the above impact, but we see an overall 70 bps YoY and QoQ contraction in Ebitda margin to 22.6 per cent. We see a 24 per cent absolute increase in A&P spends,” it said.
This brokerage sees HUL Q4 profit at Rs 2,471 crore, down 2 per cent.
PhillipCapital expects HUL to report 5.2 per cent YoY fall in net profit at Rs 2,343 crore for the March quarter compared with Rs 2,471 crore in the same quarter last year. It sees revenue for the quarter at Rs 14,423 crore, down 1.5 per cent YoY over Rs 14,638 crore in the year-ago quarter. Ebitda margin is seen at 23.1 per cent, down 61 basis points YoY and QoQ.
“HUL is expected to see low single volume growth owing to rural slowdown and increased competitive intensity. Gross margin to improve on YoY basis owing to correction in PFAD price and calibrated price hikes; Ebitda margin may decline owing to higher royalty pay-outs and loss of distribution income on account of termination of agreement with GSK Consumer,” it said.
Sharekhan expects HUL profit to rise 0.7 per cent YoY to Rs 2,489 crore. It sees sales at Rs 15,309 crore, up 2.8 per cent, aided by 2-4 per cent YoY growth in personal care and foods & refreshments categories, while homecare is likely to see a 1 per cent fall.
“Gross margins are expected to be higher by 280 bps y-o-y, aided by softening of raw material prices. However, OPM is expected to decline by 50 bps YoY due to higher advertisement and other expenses,” it said.
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