The brokerage expects revenue to dip 5.8 per cent YoY to Rs 9,369.5 crore, while EBITDA (earnings before interest, taxes, depreciation, and amortisation) and PAT (net profit) is likely to grow 1.7 per cent and 4.7 per cent YoY, respectively at 2,361.1 crore and 1,683.8 crore. "We expect HUL to see volume dip of 4 per cent on a base of 7 per cent YoY growth (Q3FY20 saw volume growth of 5 per cent YoY on a base of 10 per cent). On the pricing front, company had taken price cuts in Q2FY20 and Q3FY20 of about around 6 per cent in select soaps portfolio; hence we expect an overall price dip of 1.5 per cent," it said.
Home Care and Beauty & personal care (BPC) segments being a discretionary category, will see some slowdown. Sale of sanitisers and soaps, however, would have seen a bump up in light of the recent coronavirus outbreak. Ice-creams will be majorly impacted, while fall in crude prices will aid margins by reducing packaging cost.
Revenue growth likely to come in at Rs 10,348.8 crore, supported by 4 per cent volume and rest from product and price mix change. Prices of Palm Fatty Acid Distillate (PFAD) has risen sharply (+50%); however the falling prices of crude oil (crude derivatives and packaging material) and soda ash (-13%) could help HUL in margin expansion. Nevertheless, competitive intensity would warrant increased promotion intensity in modern trade and e-commerce channels as the contribution from these channels are rising. Given HUL’s global expertise on raw material procurement and driving supply chain cost efficiency programs, we expect EBITDA margin of 24.1% (+77bps YoY). Further, we expect disruptive competition from regional players to cap volume growth. We estimate adjusted net profit growth of 12.5 per cent YoY to Rs 1,810.5 crore.
The brokerage expects net revenue decline of 2.6 per cent YoY and 1.5 per cent QoQ at Rs 9,550 crore. It models volume decline of 1 per cent. EBITDA is seen at Rs 2,470 crore, up 6 per cent QoQ and 6.5 per cent YoY. EBITDA margin is expected to grow 176 bps QoQ and 221 bps YoY at 25.5 per cent. Net profit or PAT (profit after tax) is seen at Rs 1,830 crore, up 8 per cent QoQ and 14.8 per cent YoY. Improvement in rural business, commentary on competition, especially in natural products and oral care, pricing actions and new launches strategy and sustainability of cost-saving initiatives are some of the key things to watch out for.
Emkay Global Financial Services
The brokerage expects revenue to decline 3 per cent YoY to Rs 9,624.7 crore. EBITDA is seen at Rs 2,475.8 crore, up 7 per cent YoY, while EBITDA margin is seen at 25.7 per cent, up 240 bps. Profit after tax (PAT) is expected to grow 10 per cent YoY at Rs 17,551 crore.
In the year-ago period, the FMCG major reported a 13.84 per cent rise in net profit to Rs 1,538 crore for the quarter ended March 31, helped by improvement in margins and volume growth. Sales (revenue) during the quarter under review stood at Rs 9,809 crore, up 8.95 per cent, as against Rs 9,003 crore in the corresponding period a year ago.