Hindustan Unilever Q4 results tomorrow: FMCG major’s revenue may rise 1.1% YoY with 3% volume growth; margin seen flat

The FMCG sector has seen the gap between urban and rural growth narrowing in recent quarters helped by lower base, good harvest and price cuts to beat local competition. However, analysts believe this growth is yet to be reflected across consumer company’s performance.

Rural demand recovery hinges on higher government expenditure ahead of elections and softening inflation.

Also Read: Q4 results preview: FMCG sector likely to see muted revenue growth; margins to expand at a slower pace

Hindustan Unilever Q4 Results Preview

FMCG major Hindustan Unilever is expected to report revenue growth of 1.16% at ₹15,067 crore in Q4FY24 from ₹14,893 crore in the year-ago period, as per average estimates of five brokerages. HUL’s volume growth is likely to be 3% for the quarter.

There shall be an adverse impact of ₹75 crore on sales in Q4 due to expiration of GSK consignment arrangement. Furthermore, royalty shall be higher YoY as second year kicks in.

HUL Q4 net profit in the quarter ended March 2024 is estimated to rise 2.71% to ₹2,538 crore from ₹2,471 crore, YoY.

“We anticipate demand trends to be similar to Q3FY24 with marginal improvement in rural (across categories) on a two-year basis. Urban continues to grow faster than rural and premium continues to do better than mass for HUL. Elongated winters are unlikely to benefit much but trade inventory shall get cleared,” Nuvama Institutional Equities said.

Also Read: Reliance Q4 result: Revenue up 11% YoY, PAT comes almost flat; 5 key highlights

At the operating level, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) in Q4FY24 is expected to increase 0.60% to ₹3,492 crore from ₹3,471 crore, YoY, while EBITDA margin is estimated to remain flat at 23.2%, YoY, due to increased intensity in ad spends and higher other expense.

Brokerage firm Motilal Oswal Financial Services expects HUL to report 3% YoY domestic volume growth in 4QFY24. The increase in royalty rates and the termination of the distribution agreement for OTC and oral care products of GSK will impact EBITDA. It expects gross margin to expand 150 bps YoY due to lower raw material costs.

Meanwhile, outlook on competition from local and regional players and rural versus urban demand will be key monitorable in HUL Q4 results.

HUL share price has fallen over 15% in 2024 so far, while the stock is down more than 9% in the past one year.

Read all Q4 results here

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 23 Apr 2024, 03:27 PM IST