The net profit for the reporting quarter is estimated at Rs 2,592 – Rs 2,714 crore.
The estimates of Kotak Institutional Equities, Axis Securities, Yes Securities and Nuvama Institutional Equities have been taken into account.
The most conservative revenue estimates have been given by Axis Securities while Kotak remains most bullish from the pack.
Axis Securities is the only one to see a positive growth in the company’s profit after tax (PAT) and has the highest bottomline estimates on a YoY basis. The rest see a climbdown of 0.4%-2.9% over the corresponding quarter of the previous financial year.
The company, which is synonymous with brands like Horlicks, Dove and Surf Excel, will announce its July-September quarter earnings on Wednesday, October 23. Here’s what brokerages recommend:
Kotak Equities
Kotak Equities expects HUL to report a 4% YoY and 2.5% QoQ growth in its topline at Rs 15,728 crore for the quarter ended September 30, 2024, while its net profit could see a marginal YoY jump of 0.4% to Rs 2,657 crore. On a sequential basis, it could be up by 3.3%.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) is pegged around Rs 3,687 crore, witnessing a 0.2% YoY and 2.2% QoQ uptick. Meanwhile, EBITDA margin is expected to remain flat at 23.4% on a YoY basis while dropping by 7 bps, sequentially.
“We expect 5% YoY growth in UVG (underlying volume growth) versus 4% and 2% in Q1FY25 and Q2FY24, respectively. We expect LFL revenue growth at 4% YoY with 100 bps negative pricing impact on LFL basis (adjusted for Rs1.5 bn tax reversal benefit in the base quarter; 2.5% YoY revenue growth on reported basis),” Kotak said in its preview note.
Segment-wise, the healthcare segment may grow at 5.3% YoY versus 4.6% in Q1 while the BPC (beauty & personal care) revenue could deliver 3% LFL growth aided by an uptick in personal wash.
“We expect a 40% YoY decline in other operating income due to the discontinuation of GSK-CH OTC distribution business in November 2023,” the Kotak note said.
“We model sequentially stable gross margin at 51.4% (down 85 bps yoy on LFL basis) as a slight improvement in personal wash margin would be offset by margin pressure in tea,” the note added.
HUL’s management expects stable EBITDA margin in the near term.
Investor focus would be on consumer response to the new formulation of Lux and Lifebuoy and the competitive advantage it lends, the brokerage said.
Axis Securities
Revenue for the reporting quarter is likely to stand at Rs 15,621 crore, which may go up by 4% YoY and 3% QoQ. PAT could be reported at Rs 2,714 crore, which could be a 1.5% YoY and 5.5% QoQ uptick.
EBITDA is seen around Rs 3,742 crore, which could go up by 1.3% on a YoY basis and 3.8% on QoQ basis.
EBITDA margins are likely to see a marginal decline owing to higher ad-spends, higher royalty payment, and GSK consignment sales termination, Axis Securities said.
Key monitorables will be the rural versus urban demand outlook, competitive intensity and raw material trends.
YES Securities
Revenue is expected at Rs 15,655, gaining by 2.5% on a YoY basis. With no major change in the demand environment from 1QFY25, YES expects HUL to post UVG of 4% YoY versus 5-year CAGR of 3%. Negative pricing would lead to just 2.5% YoY revenue growth, it said.
With some inflation in a few key commodities, this brokerage builds gross margins at 51.2%, own 20 bps QoQ and 150 bps on a YoY basis. This would lead to a contraction in EBITDA margins by 120 bps YoY. EBITDA and recurring PAT are thus likely to degrow by 2.5% & 2.9% YoY, respectively, at Rs 3,601 crore and Rs 2,592 crore.
Nuvama
Nuvama sees revenue growth at 2% on a YoY basis and 3% on a QoQ basis at Rs 15,628 crore while the company’s core PAT could fall by 4% YoY basis while gaining 1% QoQ to Rs 2,637 crore.
EBITDA may fall by 1% YoY to Rs 3,667 crore while gaining 2% on a QoQ basis.
This brokerage anticipates the demand recovery to be gradual for HUL with negative pricing likely to reverse in H2FY25. Base quarter included one-off credit from resolution of tax litigation is expected to benefit both revenue (by 1%) and PAT (by 4%).
“Pricing cuts (we expect 1%) are likely to be lower than the previous quarter (about 2.5% in Q1). In tea, players have started to take gradual price hikes given 20% inflation. In palm oil, some inflation was seen, but HUL is benefiting due to its new formulation in two brands. Other commodity costs remain benign. Due to one-off, gross margin shall decline 153 bp YoY to 51.2%, whereas EBITDA margin shall contract 112bp YoY to 23.5%,” Nuvama said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
