HUL Q3 Review - Key Positives; Early Signs Of Rural Recovery, Market Share Gain Continues: ICICI Securities

ICICI Securities Report

Hindustan Unilever Ltd.’s Q3 results met consensus expectations; however, increase in royalty and central service fees (by 80 basis points) has been a dampener. However, overall impact on operating margins shall be offset with mix-improvement (premiumisation) and scale-benefits.

During the quarter, HUL continues to deliver outperformance in all key segments (share gains in 75% of portfolio). Market share gains in fabric wash (both in and volume) and health food drinks (despite of milk-inflation) have been encouraging.

Continued work on category development (both formats and premiumisation) is tracking well. We note that premium discretionary (within staples) is outperforming mass discretionary, and HUL is (somewhat) better placed at the former.

Most of the key metrics for the quarter were in-line. Raw material has meaningfully softened with benefits being deployed towards advertising and promotion.

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More Research Reports On HUL's Q3 FY23 Results Review

• Core Performance To Improve Here On: Dolat Capital

• Operating Performance Inline, Royalty Increase Not A Concern: Motilal Oswal

• Surprise Royalty Increase To Offset The Tailwinds From Positive Mgmt Commentary: Systematix

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