HUL Q2 preview: Revenue may climb up to 21% YoY in Q2FY23, say analysts

HUL Q2 preview: Analysts expect the cost inflation in palm prices and packaging material to dent the FMCG major's margin picture in Q2-FY23

HUL Q2 preview: FMCG giant Hindustan Unilever (HUL) is expected to clock revenue growth in the range of 11-21 per cent year-on-year (YoY) at Rs 15,396 crore in the July-September 2022 quarter (Q2FY23), buoyed by home care and personal segment, said analysts. The company is due to report Q2-FY23 numbers on Friday, October 21.

Analysts expect the cost inflation in palm prices and packaging material to dent the FMCG major's margin picture in Q2-FY23. EBITDA margin is seen contracting in the range of 64-200 basis points (bps) to 22.6 per cent in Q2FY23 from 24.6 per cent, in the year-ago quarter, as per brokerage estimates.

At the bourses, shares of HUL have climbed over 9 per cent so far in calendar year 2022 (CY22). In comparison, the S&P BSE Sensex and Nifty50 have surged up to 1.4 per cent each during the same period.

Here's what top brokerage houses expect from HUL's Q2FY23 numbers:

HDFC Securities: The brokerage firm pegs 14 per cent YoY net sales growth at Rs 14,400 crore, driven by 3 per cent volume growth. Analysts also expect home care, BPC, and food businesses to grow in the range of 11-27 per cent YoY. Adjusted PAT, on the other hand, is likely to grow 10 per cent YoY to Rs 2,400 crore. However, EBITDA margin is expected to contract 125 bps YoY to 23.4 per cent in Q2, due to high input costs inventory.

IDBI Capital: HUL's business segments like beauty or personal care and home care are likely to boost 11 per cent revenues YoY to Rs 14,090 crore in Q2FY23 from Rs 12,724 crore in Q2FY22. Since prices of palm oil and PFAD increased between 21-27 per cent YoY, analysts expect 143 bps YoY squeeze in gross margin to 50 per cent. EBITDA margin, too, is likely to decline 64 bps YoY to 24 per cent in Q2FY23.

Prabhudas Lilladher: Analysts estimate 21 per cent YoY growth in revenue to Rs 15,396 crore due to 14.5 per cent improvement in realisations and 6.5 per cent growth in volume. However, gross margins will continue to remain under pressure due to commodity inflation despite price hikes. Therefore, EBITDA margin is expected to drop 200 bps YoY to 22.6 per cent in Q2FY23.

Kotak Institutional Equities: The brokerage firm models 17 per cent YoY revenue growth to Rs 14,890 crore in Q2FY23 from 12,724 crore in Q2FY22. They expect the home care segment to grow 29 per cent YoY, on the back of price hikes in laundry. Beauty and personal care, meanwhile, is forecasted to see 13.5 per cent YoY growth as hikes pause in the skin cleansing segment. Food and refreshments is expected to see 9 per cent YoY revenue growth as urban outperformance over rural shall continue, said analysts.

Antique Broking: Analysts expect the FMCG major's sales to grow 18.4 per cent YoY to Rs 15,066 crore in Q2FY23 from Rs 12,724 crore, in the year-ago period. While detergents and demand for soaps will continue to witness healthy traction, skin care is likely to be impacted due to its discretionary nature. Though they estimate 260 bps YoY gross margin contraction in Q2FY23, they expect sequential margin to improve with drop in palm oil and crude or packaging material.