HUL Q4 Results Preview: Price Cuts Likely To Impact Topline Growth, Shares Gain 1.88% In 1-Week

Large cap FMCG company Hindustan Unilever Ltd today likely to declared subdued Q4 results amid subdued rural demand. Current market price of Hindustan Unilever Ltd share on BSE is Rs 2262.75 per share with intraday gain of 0.90%. HUL shares gained 1.88% in last 1-week. But, the FMCG giant's shares declined by 14.80% year-to-date. According to several analysts tracking HUL closely, its profit after tax (PAT) for Q4 financial year 2024 likely to decline marginally while revenue may rise marginally.

Brokerage firm Axis Securities anticipates a decline of 2.6% in the net profit. On the other hand, Anand Rathi and Sharekhan feel HUL may witness marginal surge in PAT for the March quarter of FY 2024.

Motilal Oswal expects HUL may declare a profit of Rs 2,507.6 crore, EBITDA at Rs 3,542 crore and sales at Rs 15,363.9 crore for the March quarter. HUL wide product basket and presence across price segments should help the company achieve a steady growth recovery. "We will monitor the execution in these segments under the new CEO. The valuation at 45x FY26E earnings per share (EPS) is reasonable given its last five-year average price-to-earnings (P/E) of 65x on one year forward," added Motilal Oswal.

Meanwhile, Nuvama Institutional Equities expects Hindustan Unilever's Q4FY24 revenue likely to surge 1% Y-o-Y/down 1% QoQ at Rs 14,784.4 crore, while EBITDA and core net profit are likely to decline 2% and 4% Y-o-Y to Rs 3,400 crore and Rs 2,458.1 crore, respectively. Nuvama expects volumes to surge 3% Y-o-Y, driven by 2% dip in prices. It expects demand trends to be similar to Q3FY24 with marginal improvement in rural (across categories) on a two-year basis.

"Urban continues to grow faster than rural, and premium continues to do better than mass for HUL. Elongated winters are unlikely to benefit much but trade inventory shall get cleared. We expect gross margins to improve 269bp Y-o-Y. Ebitda margin shall dip 70bp Y-o-Y due to high A&P, second year in terms of increase in royalty, and GSK consignment arrangement expiry (likely Rs 60-75 crore Ebitda impact)," added Nuvama.

On the other hand, Elara Capital said in Q4FY24, demand for FMCG products faced challenges and dampening volume growth with no meaningful change in the rural growth trends. Key factors like low farm income and the surge of small regional competitors impacted bigger companies.

The brokerage said in its note, "We note Chyawanprash sales lost steam in Q3, due to delayed Winter and have not recovered in Q4. Food categories continue to outperform home and personal care products. Reviving rural demand is crucial for the FMCG sector, with companies pinning hopes on a favourable Monsoon, which could stimulate the rural economy."

Kotak Institutional Equities expects flat Y-o-Y revenue growth amid demand trends largely tracking Q3, resulting in 2% Y-o-Y growth in underlying volume growth (UVG). "HUL's price reductions (we estimate 2 per cent Y-o-Y decline in Q4) is expected to impact topline growth," added the brokerage firm.

"We expect a 70% Y-o-Y decline in other operating income due to discontinuation of Gsk Consumer Healthcare Over the Counter (GSK-CH OTC) distribution business in November 2023," added Kotak Institutional Equities.

HUL Dividend History: Hindustan Unilever declared 49 dividends since March 27, 2001. In last 1 year, HUL declared an equity dividend amounting to Rs 40.00 per share. At the current share price of Rs 2233.00, HUL offers a dividend yield of 1.77%.

HUL Latest Dividend: HUL declared an interim dividend of Rs. 18/- per equity share of face value of Re. 1/- each for the financial year ending 31st March, 2024.

HUL Share Performance: The 52-week high price of HUL Share on BSE is Rs 2768.50 (as on 07/07/2023) and 52-week low price is Rs 2170.25 (as on 16/04/2024). The company has a market capitalisation of Rs 5,32,182.42 crore. Hindustan Unilever Ltd shares fell 4.73% in last 3-months, declined 9.42% in last 1-year, and gave return of 6% in last 2-year, and fell again by 1.96% in last 3-years, and soared 30% in last 5-years.

Hindustan Unilever About: Hindustan Unilever Limited is India's largest Fast Moving Consumer Goods (FMCG) Company with a 90-year heritage in the country. It has a wide and resilient portfolio of 50+ brands, spanning 16 FMCG categories, which are a part of everyday life of millions of consumers across India. It manufactures more than 65 billion units annually, that are made available to our consumers through nine million retail outlets and many digital commerce platforms, according to its official website.

Disclaimer:

The stock has been picked from the brokerage report of Motilal Oswal, Nuvama, Kotak Institutional Equities, Elara Capital, Axis Securities, and Anand Rathi. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.