Here's a look at what brokerages expect from HUL's June quarter numbers.
is likely to witness a revenue decline of 2.4 per cent year-on-year (YoY) at Rs 9,872.8 crore, including acquired company's sales. Though the company was able to start manufacturing in mid-April, it only reached the previous year’s levels by June 2020. On the demand front, we believe personal care (cosmetics) and ice-creams would have been severely impacted with a near washout quarter for both categories. However, soaps, sanitisers would have seen strong growth induced by increased consumer awareness about hygiene. We expect 12 per cent and 13 per cent revenue decline in home care & BPC (beauty & personal care) categories, respectively. With benign raw material cost, reduction in A&P spends and other cost-cutting measures, we expect the company to maintain operating margins at 26.5 per cent (35 bps higher YoY). Profit after tax (PAT) or net profit is likely to grow 7.9 per cent YoY at Rs 1,892.9 crore, aided by profits from GSK acquisition and lower income tax.
We estimate 2.4 per cent YoY revenue growth at Rs 10,361.3 crore taking into consideration the acquisition of GSK consumer w.e.f April 1, 2020 (Hence, Q1FY21E are not comparable YOY and QoQ). We build in a revenue decline of 5 per cent /20 per cent for Home care/BPC segments and a 5 per cent growth for the foods and refreshments segment. Prices of palm fatty acids (PFAD) have risen (+20%), however, the sharp fall in prices of crude oil (crude derivatives and packaging material) and soda ash (-9%) could help HUL
in gross margin expansion. Moreover, considering management focus on launching products in health/ hygiene space, HUL
will continue investing behind its brands which will keep average selling price (ASP) high. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) is seen at Rs 2,467.4 crore, down 6.8 per cent YoY while EBITDA margin is expected to come in at 23.8 per cent, down 236 bps due to lower operating leverage as company focused on producing mass hygiene products. We estimate adjusted net profit growth of 2.7 per cent YoY to Rs 1,795.8 crore majorly due to the lower tax rate.
We anticipate revenue and EBITDA to dip 2 per cent and 9 per cent YoY to Rs 9,914.6 crore and Rs 2,409.2 crore, respectively while profit after tax (PAT) would grow 2.8 per cent YoY at Rs 1,796.5 crore. We expect HUL to see a volume dip of 12 per cent on a base of 5 per cent YoY growth (Q4FY20 saw volume dip of 7 per cent YoY on a base of 7 per cent). On the pricing front, we expect an overall price dip of 1.5 per cent. The revival of demand in beauty and personal care products will decide their future growth trajectory. The pandemic has imposed incremental operating costs on the business. Hence, there would be an impact on margins in the short term (gross as well as EBITDA level).
Nirmal Bang Securities
While the inclusion of GlaxoSmithKline Consumer Healthcare's (GSK CH) sales has had a positive impact on the topline, we expect a 10 per cent volume decline in HUL’s standalone domestic business to offset the same and build in 2.3 per cent YoY sales decline. Benign input prices will be slightly offset by unfavourable mix. Lower operating leverage during the quarter will lead to EBITDA margin contraction of 180bps to 24.4 per cent. EBITDA is likely to decline by 9 per cent YoY while Adj. PAT is expected to grow by 2.3 per cent YoY due to a lower tax rate compared to the base quarter.