HUL Q1 preview: Brokerages eye 7-15% YoY PAT growth; margin impact in focus


Q1 preview: Fast-moving consumer goods (FMCG) maker Hindustan Unilever (HUL), in line with the industry’s trend, is expected to post strong sales volume growth in the June quarter, helped by low-base effect and traction in beauty & personal care and foods & refreshment segments. The large-cap consumer goods company is slated to post its Q1FY22 results on Thursday, July 22.

“The sector witnessed a high growth quarter on the back of lower sales in the base quarter, which was marred by the country-wise strict lockdown. Though Q1FY22 also witnessed the adverse impact of a second Covid-19 wave and subsequent state-wise lockdowns, the impact on supply chain was minimal with industry, government and trade channel’s preparedness,” Sanjay Manyal, research analyst at ICICI Direct said.

That said, analysts are divided on operating margins outlook. While one faction expects a sharp increase in input and packaging costs to weigh on margins, the other believes price hikes would offset any such increase.

Competitive intensity, raw material trends, demand trends for OOH (out of home) categories, analysts say, are among key monitorable. On NSE, shares of rose a mere 1.6 per cent during the quarter under review as against a 7 per cent rise in and 3 per cent in the Nifty index.

Here’s a look at what top brokerages expect from HUL’s Q1 numbers:

Axis Securities

The reported revenues will rise 12 per cent on a lower base and 8 per cent/4 per cent volume/price-led growth aided by improved traction in OOH and personal care segments led by lockdown easing, the brokerage said adding that GSK-Consumer Healthcare (CH) too would see healthy contribution in Q1.

It pegs June quarter revenue at Rs 11,850 crore as against Rs 10,560 crore posted in the same quarter last fiscal. Quarter-on-quarter (QoQ), the brokerage sees revenue declining by 2.3 per cent from Rs 12,132 crore posted in the March quarter.

EBITDA (earnings before interest, tax, depreciation and amortisation) margin to sustain YoY owing to price hikes, tailwinds from GSK-CH integration and cost savings, the brokerage added. It projects Q1 EBITDA margin at 25.1 per cent as against 25 per cent posted by in the corresponding quarter last year and 24.4 per cent in March 2021 quarter. Similarly, profit would be higher in line with improved EBITDA performance, it opined, pegging the figure at Rs 2,166 crore, up 15.2 per cent YoY. In June last year, PAT stood at Rs 1,881 crore. Sequentially, it could rise 1.1 per cent from Rs 2,143 crore.

ICICI Direct

HUL is likely to report 21.3 per cent YoY revenue growth at Rs 12,807.6 crore led by 29.9 per cent growth in beauty & personal care segment (BPC) and 22 per cent growth in foods & refreshment segment, ICICI Direct said. Both these segments were adversely impacted by lockdown in the base quarter.

“We believe home care segment would grow at slower 3.7 per cent given the second wave of pandemic would have impacted detergent sales,” it added. On a QoQ basis, revenue may rise 11.9 per cent as per this brokerage’s estimates.

With the sharp increase in palm oil prices and elevated tea procurement prices, it expects operating margins to contract 175 bps to 23.3 per cent. Although, it expects net profit to grow 11.3 per cent YoY and 4.2 per cent sequentially to Rs 2,093.4 crore.


Profit after tax (PAT) will grow 7 per cent as per Sharekhan’s estimates to Rs 2,024 crore but decline nearly 5 per cent QoQ. It expects higher palm oil prices and packaging costs to result in a 109-bps decline in gross margin. OPM to decline by ~60 bps YoY to 24.4 per cent, the brokerage said.

“Volume growth in the domestic business is expected to be at 7-8 per cent. Strong demand for personal wash and hygiene products would help in good growth in personal care products. Home care would maintain steady performance. Nutrition business will continue to gain good traction, while tea business will grow in double digits due to price hikes undertaken,” it added.

It pegs June quarter sales at Rs 11,714.3 crore, up 10.9 per cent YoY but down 3.4 per cent QoQ.

Emkay Global

Organic sales are expected to grow 19 per cent on a yearly basis to Rs 12,530.5 crore, according to Emkay Global and 3 per cent, sequentially. “We expect home and personal care to grow by 16 per cent and 18 per cent, respectively. Food and refreshment business is likely to grow by 21 per cent, excluding GSK’s 33 per cent organic growth,” it said.

Despite higher input inflation from palm oil, tea and crude prices, the margin should be flat due to low comparables. It projects Q1 EBIDTA margins to grow to 25.3 per cent, up 20 bps YoY and 90 bps QoQ.

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