Earnings before interest, tax, depreciation, and amortisation (EBITDA) is projected to grow 15.5 per cent YoY to Rs 2,362.5 crore. However, on quarter-on-quarter (QoQ) basis, the numbers are expected to fall 3.3 per cent. EBITDA margin is pegged at 23.5 per cent, up 210 basis points (bps) against 21.4 per cent in the year-ago period. Net profit or profit after tax (PAT) is likely to come in at Rs 1,658.7 crore, up 18.4 per cent YoY but down 9.5 per cent QoQ.
The brokerage expects 4 per cent volume growth for the quarter. HUL is expected to witness 6.5 per cent YoY sales growth mainly driven by 4 per cent volume growth in addition to product mix improvement of 2 per cent.
"We believe muted sales growth would be due to weak growth in personal care segment (around 50 per cent of sales), impacted by intensified competition in soaps category. Home care and foods & refreshment segment should witness better sales growth owing to premiumisation trend," says an ICICI Securities note.
"We expect HUL to witness slight operating margin decline of 42 basis points (bps) to 21 per cent due to upsurge in palm oil prices. We expect net profit growth of 4 per cent YoY to Rs 1,502.4 crore," the brokerage added.
At the bourses, HUL has unperformed the market during October-December period. The stock has slipped nearly 3 per cent against over 6 per cent rise in the Nifty50 index. The Nifty FMCG index slipped over 3 per cent during the same period.
Analysts at Edelweiss Securities expect home-care business segment to grow at 7 per cent YoY on a base of 14.8 per cent (Q2FY20 saw 9.4 per cent YoY growth on a base of 12.4 per cent). Beauty & personal care (BPC) being a discretionary category will see some slowdown growing at 4 per cent YoY on a base 11 per cent (Q2FY20 saw 5.3 per cent YoY growth on a base of 10.4 per cent). Within BPC, skin care portfolio will be adversely impacted due to delayed winter. Food and refreshments to grow at 8 per cent YoY on a base of 9.9 per cent, the brokerage said.
Geography-wise, South India has been relatively resilient in demand terms and doing relatively better than states like MP, Chhattisgarh, parts of Maharashtra which have been subdued on account of subdued rural demand, the brokerage added.
In the year-ago quarter, HUL had reported a 9 per cent increase in its net profit to Rs 1,444 crore on account of strong volume growth. Sales during the quarter under review stood at Rs 9,357 crore, up 12.42 per cent YoY.