HUL Q4 Results Review - Demand Recovery Will Be Gradual; Maintain Buy: Axis Securities

Axis Securities Report

Hindustan Unilever Ltd. reported flat revenue growth (2% volume growth) to Rs 14,693 crore, which was in line with our/cons estimates. This was on account of a subdued demand environment. Furthermore, price cuts in the home care and skin care segments impacted the overall revenue growth.

Premium portfolio (~25% of the portfolio) continues to remain strong and urban business continues to grow faster than rural. The management reiterated that it has gained market share in over 60% of the portfolio across categories.

HUL’s gross margins improved 350 basis points YoY to 51.3%; however, Ebitda margin expansion declined 19 bps YoY to 23.1% owing to higher ad spends, royalty payments, and termination of GlaxoSmithKline commission business. Adjusted profit after tax stood at Rs 2,396 crore, down 3% YoY.

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