Hindustan Unilever - Institutional Research Desk at HDFC Securities

Home care remains a showstopper; in-line margin

HUL reported marginally better revenue growth at 16% (HSIE 14%), with volume growth of 5% (HSIE 5%). Three-year revenue and volume CAGRs stand at 11% and 3.5%. Home care remained the showstopper, revenue/EBIT grew by 32/23% YoY. BPC clocked revenue/EBIT YoY growth of 10.5 %/flat and F&R reported 7/2% YoY growth. Consistent above-the-par delivery of home care has been helping the company register better than the industry show (reeling with a single-digit volume decline in the last nine months). GM and EBITDA margin improved sequentially (largely in-line) but tepid YoY, resulting in EBITDA growth of 8% (HSIE 7%). The company also announced an increase of 80bps in the royalty rate (to 3.45%) to be carried over the next three years (an increase of 45/25/10bps each year). With RM softening phase, the royalty increase will not pinch much but will limit the margin expansion. Our view remains the same: demand pick-up will be gradual while margin recovery will be faster. We cut EPS estimate for FY24/25 by 1/2%. We value the stock on 47x P/E on Dec-24E EPS to derive a TP of INR 2,400. Maintain REDUCE.

Shares of Hindustan Unilever Limited was last trading in BSE at Rs. 2548.35 as compared to the previous close of Rs. 2650.25. The total number of shares traded during the day was 103205 in over 11831 trades.

The stock hit an intraday high of Rs. 2605.00 and intraday low of 2536.65. The net turnover during the day was Rs. 264577885.00.

Source : Equity Bulls

Keywords

HindustanUnilever INE030A01027 HUL HDFCSecurities Q3FY23 ResultUpdate