Hindustan Unilever (HUL) reported strong numbers for the second quarter (Q2) of FY19, broadly in-line with our estimates on revenue and EBITDA fronts and marginally better on the PAT front. The company has reported revenue growth of 11.1% yoy to Rs9,234cr driven by a 10% underlying volume growth. EBITDA jumped 20% yoy to Rs2,019cr, in-line with the estimate. The EBITDA margin expanded 162bps yoy to 21.9%. Resultantly, the company has reported a PAT growth of 19.5% yoy to Rs1,525cr (estimate 1,440cr).
The company has reported 12% yoy domestic consumer growth, primarily led by 10% yoy underlying volume growth.
All segments reported double-digit revenue growth and EBIT margin expansion.
The home care segment reported 12.4% yoy growth to Rs3,080cr with an EBIT margin expansion of 199bps yoy. The segment’s performance was driven by strong growth in fabric wash and household care.
The beauty and skin care segment (earlier Personal care) saw 10.4% revenue growth with 159bps yoy expansion in EBIT margin. Personal wash segment was driven by strong performance of the premium portfolio, which includes Dove and Pears. Hair care reported double-digit growth.
Food and refreshment segment also witnessed double-digit growth of 11.7% yoy with EBIT margin expansion of 176bps yoy. Double-digit growth in ice cream and frozen desserts aided the growth. Company acquired Adityaa Milk Ice cream during the quarter and the integration has commenced.
Due to raw material inflation, primarily in crude and its derivatives, gross margin expansion was restricted to 74bps. However, the company’s savings programme and leverage in other expenses (down 154bps yoy as percent of sales) led to EBITDA margin expansion of 162bps yoy to 21.9%.
The advertisement spends remained elevated for the quarter at 12% of net sales.
Other income for the quarter jumped sharply by 49.5% yoy to Rs305cr.
Company has declared an interim dividend of Rs9/share.
The management indicated that there may be price hikes going forward, if required, in order to pass on the increase in cost of key raw materials.
At 1.2x, rural growth continues to grow at a faster rate than the urban. However, management has indicated that it is still not at par with the previous levels.
Hindustan Unilever Ltd share price ended at Rs1,568.65, up 40.15 points, or 2.63%, from its previous close of Rs1,528.50 on the BSE.
The scrip opened at Rs1,549.15 and touched a high and low of Rs1,578 and Rs1,541.15, respectively. A total of 18,82,950 (NSE+BSE) shares were traded on the counter. The stock traded above its 50 DMA.
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