HUL Q4 preview: Brokerages eye high double-digit growth in PAT, revenue

Fast-moving consumer good (FMCG) major Hindustan Unilever (HUL) is expected to post a strong set of numbers for the quarter ended March 2021 (Q4FY21) supported by a lower base and improved traction in the out of home (OOH) and personal care segments. Moreover, consolidation of acquired nutrition business (GSK) could also aid the company's performance, say analysts.

The company is slated to post its results on Thursday, April 29.  

Analysts forecast high double-digit growth in both net profit and revenues of the company on a yearly basis. "The growth is expected to be driven by better demand from both rural and smaller cities led by better rural income, urban and trade channels recovery," said Gazal Nawaz, research analyst at Narnolia Financial in a result preview note.

Most brokerages expect the operating margins to expand on a year-on-year (YoY) basis with a low base effect, although, the figure is likely to decline sequentially.

Overall volume growth, the performance of the nutrition business and the movement in advertisement and promotion spend along with other expense are among key trackable for the quarter under review, Nawaz said.

Here's what to expect from HUL's Q4 numbers:

Net profit

Brokerages' profit growth expectations from HUL for the March quarter gyrate between 11-32 per cent on a YoY basis, however, the figure may remain flat sequentially.

ICICI Securities has the most bullish projection of 31.9 per cent YoY jump in March quarter net profit at Rs 2,002.8 crore as against Rs 1,519 crore posted in the same quarter last year. The figure is expected to rise 4.25 per cent quarter-on-quarter (QoQ) in comparison to Rs 1,921 crore reported in the December quarter of FY21.

Meanwhile, analysts at ICICI Securities eye a 26 per cent YoY rise and 0.6 per cent QoQ decline in Q4 net profit at Rs 1,910 crore. PAT is expected to be higher and in line with improved Ebitda (earnings before interest, tax depreciation and amortisation) performance, they said.

Nawaz of Narnolia has a more modest expectation of an 11 per cent YoY rise in HUL's March quarter net profit at Rs 1,684 crore. The figure, however, could fall 12.3 per cent sequentially as per his estimates. 

Revenue 
 

Brokerages ICICI Securities and Axis Securities eye an over 30 per cent YoY rise in March quarter revenue although, on a quarterly basis, the figure is likely to remain flat.

ICICI Securities pegs March quarter revenue at Rs 11,955.1 crore, up 32.7 per cent YoY as against Rs 9,011 crore posted in the same quarter last year. Sequentially, the figure is seen flat at 0.78 per cent in comparison with Rs 11,862 crore.

Analysts at Axis Securities peg Q4FY21 revenue at Rs 11,908 crore, up 32 per cent yearly and 0.4 per cent sequentially. "Reported revenues are expected to grow 32 per cent on a lower base and 27 per cent volume growth aided by improved traction in out of home and personal care segments led by lockdown easing. GSK to see healthy contribution in Q4," it said.

Brokerages Narnolia Financial and Prabhudas Lilladher eye a more moderate growth of nearly 20 per cent in Q4 revenue.

Narnolia projects March quarter revenue growth of 21 per cent YoY at Rs 10,903 crore, driven by the company’s health & hygiene and nutrition business along with recovery in the beauty & personal care business.

The figure although could contract 8 per cent QoQ.

Prabhudas Lilladher, meanwhile, forecasts a 23.5 per cent YoY rise in revenue for the quarter ended March 2021 at Rs 11,127.8 crore while the same could decline 6.2 per cent QoQ. "We expect 8.5 per cent volume growth (ex-GSK) and a revenue growth of 23.5 per cent (including GSK) as sales of Horlicks, personal care and out of home consumption products increase," the brokerage said.

Ebitda Margin
 

HUL's Ebitda (earnings before interest, tax, depreciation and amortisation) margins are expected to take a hit on a QoQ basis, but can expand YoY, analysts say.

"Ebitda margin is likely to be around 100bps higher YoY owing to tailwinds from GSK integration and cost savings," said Axis Securities in a note and eyes the figure at 24 per cent for the quarter under review, as against 22.9 per cent posted in the year-ago period. While on a QoQ basis, the figure could decline by 19 bps, it said. Ebitda margin for the December quarter came in at 24.1 per cent.

"We built in 80 bps Ebitda margin expansion on back of 50 bps gross margin expansion and lower costs," said Prabhudas Lilladher. The brokerage pegs Ebitda margin at 23.7 per cent for Q4FY21.