HUL Q4 Results Preview: Shares Gain 1.88% In One Week, Price Cuts Are Likely To Affect Topline Growth

Due to weak rural demand, major FMCG business Hindustan Unilever Ltd. is expected to report muted Q4 earnings today. Hindustan Unilever Ltd.’s share is now trading at Rs. 2262.75 on the BSE, representing a 0.90% intraday gain. In the previous week, HUL’s shares increased by 1.88%. However, the FMCG behemoth’s stock has been down 14.80% so far this year. Several experts who follow HUL carefully predict that although sales may increase slightly, profit after tax (PAT) for the fourth quarter of the 2024 fiscal year is expected to fall slightly.

Axis Securities, a brokerage, projects a 2.6% drop in net profit. However, Anand Rathi and Sharekhan believe HUL’s PAT for the March quarter of FY 2024 may see a little increase.

Motilal Oswal anticipates that HUL will report revenues of Rs 15,363.9 crore, an EBITDA of Rs 3,542 crore, and a profit of Rs 2,507.6 crore for the March quarter. HUL’s broad range of products and presence at various price points could aid in the company’s rebound to stable development. “Under the new CEO, we will keep an eye on how these sectors are being executed. Given its past five-year average price-to-earnings (P/E) of 65x on a one-year forward basis, the value of 45x FY26E earnings per share (EPS) is appropriate, according to Motilal Oswal.

In the meantime, Nuvama Institutional Equities predicts that Hindustan Unilever’s Q4FY24 sales will likely increase by 1% year-over-year or decrease by 1% quarter-over-quarter to Rs 14,784.4 crore. Meanwhile, EBITDA and core net profit are anticipated to decrease by 2% and 4%, respectively, to Rs 3,400 crore and Rs 2,458.1 crore. Nuvama projects a 3% YoY increase in volumes, driven by a 2% decrease in pricing. It projects demand patterns to resemble those of Q3FY24, with a little improvement in rural areas (across all categories) during the next two years.

“For HUL, premium continues to outperform mass, and urbanization is still outpacing rural growth. Longer winters won’t likely help much, but trade inventories will eventually be removed. Gross margins should increase by 269bp year over year. “Due to high A&P, the second year of royalty increases, and the expiry of the GSK consignment arrangement (which is expected to have an Ebitda impact of Rs 60-75 crore),” Nuvama said, “Ebitda margin will drop 70bp year over year.”

However, Elara Capital reported in Q4 FY24 that there was no appreciable shift in the rural growth patterns, and that the market for FMCG items experienced difficulties and was slowing volume growth. Larger enterprises were influenced by important variables such as decreased farm income and the rise of small regional rivals.

“We note Chyawanprash sales lost steam in Q3, due to a delayed winter and have not recovered in Q4,” the brokerage said in its report. Food categories are still doing better than household and personal hygiene goods. For the FMCG industry to thrive, rural demand must be revived. Businesses are counting on a favorable monsoon to boost the rural economy.”

With demand dynamics mostly mirroring Q3, Kotak Institutional Equities predicts flat year-over-year revenue growth, which will lead to 2% Y-o-Y increase 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,” said the brokerage.

“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,” said Kotak Institutional Equities.

History of HUL Dividends: Since March 27, 2001, Hindustan Unilever has issued 49 dividends. HUL issued an equity dividend of Rs 40.00 per share for the last year. With its shares now trading at Rs 2233.00, HUL has a 1.77% dividend yield.

HUL’s Most Recent Dividend: For the fiscal year that ends on March 31, 2024, HUL announced an interim dividend of Rs. 18/-per equity share with a face value of Re. 1/-each.

HUL Share Performance: As of 07/07/2023, the price of HUL Share on the BSE was Rs 2768.50, and as of 16/04/2024, it was Rs 2170.25. The market capitalization of the firm is Rs 5,32,182.42 crore. After falling 4.73% over the previous three months, 9.42% over the previous year, and yielding a 6% return over the previous two, Hindustan Unilever Ltd.’s shares plummeted by 1.96% over the previous three years before rising 30% over the previous five.

Hindustan Unilever About: With a 90-year history in India, Hindustan Unilever Limited is the biggest Fast-Moving Consumer Goods (FMCG) company in the nation. Its portfolio of more than 50 brands, which cover 16 FMCG categories and are a part of millions of Indian customers’ daily lives, is robust and diverse. According to its official website, it produces over 65 billion items a year, which are distributed to customers via nine million retail locations and other internet commerce platforms.