HUL Q3 results: Profit, sales, volume growth to be flattish on price cuts, no uptick in demand

Hindustan Unilever Ltd (HUL) is expected to report a tepid set of quarterly results later today. Profit growth is likely to be nil while revenue could fall on yearly basis, analysts said in view of weak demand trends, with no material pick-up in the festive demand. Kotak Institutional Equities sees Q3 profit falling 0.2 per cent YoY to Rs 2,576 crore on 0.1 per cent rise in sales at Rs 15,239 crore. HUL's price reductions, which Kotak estimates 2 per cent YoY, is expected to impact top line growth.

“We expect: moderation in HC growth to 0.5 per cent YoY (versus 3.3 per cent YoY in Q2) due to price cuts in the laundry portfolio, (2) moderation in BPC to 0.8 per cent YoY (versus 1.8 per cent YoY on adjusted basis in 2Q) owing to price cuts in soaps and (3) continued weakness in F&R growth, resulting in 0.8 per cent YoY (versus 3 per cent decline in Q2), as we expect high inflation to weigh on demand in coffee (60-70 per cent in the past two years) and HFDs, and consumer downtrading to loose tea," Kotak said.

Prabhudas Lilladher said HUL may deliver volume growth of 1 per cent, but sees revenue growth and realisation growth falling 2 per cent and 3 per cent, respectively. It sees gross margin at 52.5 per cent and Ebitda margin at 24 per cent. "Adjusted PAT is expected to be flattish at Rs 2,579 crore. Q3 numbers have the impact of end of marketing agreement with GSK from November 1," it said.

YES Securities sees standalone profit at Rs 2,624.70 crore, up 1.7 per cent. Sales is seen rising 2 per cent to Rs 15,531 crore. This brokerage sees volume growth at 2.5 per cent against a four-year CAGR of 3 per cent. This along with slight negative pricing should lead to a subdued 2 per cent YoY revenue growth, it said.

"We expect higher priced inventory to impact QoQ gross margin and thus build 52 per cent GM (down 70 bps QoQ; 450 bps YoY), resulting in EBITDA margin expansion of 50bps YoY to 23.7 per cent. Ebitda and recurring PAT are thus likely to grow by 4.1 per cent YoY and 1.7 per cent YoY, respectively," it said.

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