HUL Q1 preview: Revenue growth to moderate on price action-led base effect

economictimes.indiatimes.com:

Hindustan Unilever (HUL) is expected to see moderation in revenue growth, mainly due to the base effect of price increases and cuts. The company's revenue is seen growing anywhere between 8-9% over previous year. However, volume growth is likely to inch up to about 6%, led by home care and personal care segments.

Net profit for the first quarter is seen in double digits in the range of 13-15% year-on-year around Rs 2,617 crore. EBITDA margins are likely to expand by a modest 63 basis points YoY owing to higher ad-spends, offsetting gross margins expansion of 150 bps YoY, according to analysts. In the preceding March quarter, HUL posted a 10% jump in its net profit at Rs 2,552 crore and 11% rise in its quarterly revenue at Rs 14,638 crore.

Some of the key monitorables for investors in the earnings card include the demand outlook on rural vs urban, competitive intensity, OOH (out-of-home) and discretionary category numbers. Here's what brokerages expect from HUL in Q1.YES Securities The brokerage expects HUL to post underlying volume growth of 5.5% YoY, leading to 8.5% YoY revenue growth. «We expect gross margin to improve by 80 bps QoQ (+210bps YoY) as net material inflation (NMI) has moderated sequentially, resulting in EBITDA margin expansion of 70 bps YoY to 23.5%.

EBITDA and APAT are likely to grow by 12% YoY and 14.4% YoY, respectively,» it said.Nuvama Nuvama sees revenue, EBITDA and PAT to increase by 8%, 11.6%, and 13.9% YoY respectively. It expects pricing growth to ease off gradually in FY24 every quarter due to correction in RM and base effect. Price cuts in past few quarters were taken in soaps, laundry while price increases happened in health food drinks (HFD).