Q2FY23 Preview: HUL: Revenue seen at Rs147,338 million, PAT at Rs24,736 million

20 Oct 2022 , 10:01 AM

Result date: 21^st October, 2022
Recommendation: Add
Target price: Rs2,700
 
Analysts at IIFL Capital Services expect Hindustan Unilever (HUL) to post 2% volume growth in the September 2022 quarter, which is lower than the 6% volume growth that the company reported in the previous quarter, but higher than the flattish growth reported in Q4FY22.

However, if we look at the 3 year CAGR, it translates into organic volume growth of 2.3% versus 2.1%/2.6% in Q1FY23/Q4FY22. Overall sales growth would be 15%, which implies a pricing growth of 13%.

During the September 2022 quarter, prices of key inputs, namely, Palm oil and PFAD increased 27% and 21%, respectively. Tea prices fell 2% over the year-ago quarter. This could put margins under pressure. Analysts at IIFL Capital Services forecast a 90 basis points contraction in
EBITDA margin over the year-ago quarter, translating into an EBITDA growth of 11%. A lower tax rate would result in a higher EPS growth of 13%.

The company’s Profit After Tax or PAT could grow 13.4% over the year-ago quarter.

Important management insights to watch out for:
·         Recovery in rural business
·         Pricing actions
·         New product launches

Rs. Million	September 2022 estimates	YoY change
Sales	147,338	15.0%
EBITDA	35,772	10.9%
Profit After Tax	24,736	13.4%

Source: Company, IIFL Research