HUL: Q3FY23 Result Update
24-01-2023

Market Cap: Rs. 6,11,129 cr

CMP Rs. 2,601 |PE 62x TTM

Results	INR Cr.	Y-o-Y Growth	Comments
Revenue	15,228	16.3%	Revenue growth was driven by growth in home care (31.6%), Beauty & Personal Care (BPC)(10.5%), and foods (6.8%)
Gross Profit	7,231	6.0%	Gross Profit margin came in at 47.5% vs 52.1% in 3QFY22, primarily due to higher commodity inflation as against the price hikes take by the company
EBITDA	3,537	7.9%	EBITDA margin came in at 23.2% vs 25.0% in 3QFY22, due to higher advertising spends. However, there were significant savings in employee costs and other expenses

Key Highlights:

Home Care segment witnessed double-digit volume growth despite price hikes. Fabric wash registered high double-digit revenue and double-digit volume growth. Price hikes were also taken in fabric wash and household care portfolios to partly offset the input cost inflation.
In the BPC segment, skin cleansing delivered strong double-digit revenue growth with mid-single digit profit growth. Price cuts were taken in soaps due to decline in palm oil prices. Delayed winter impacted growth in skin care, however non-winter portfolio delivered double-digit growth.
Foods grew in high-teens with double digit volume growth led by jams, ketchup and other food solutions.
Royalty payments to the Unilever parents will increase from the current ~2.65% to ~3.45% of turnover for a period of 5 years. This increase will come into effect in a staggered manner over a period of 3 years. Earlier royalty payment contract had tenure of 10 years.

Management Outlook:

Management expects growth to be price-led as YoY inflation is still at elevated levels. It also expects the consumer demand to recover owing to relative easing of inflationary pressures.
Management is of the view that margin improvement will be driven by premiumization and leverage scale benefits, provided inflation settles down at current levels.
The company expects the effective tax rate to be ~24% in FY23.
As per the management, growth in the past decade was driven by topline and substantial margin improvement. In the coming decade, company expects double digit EPS to be driven mainly by topline growth and modest margin improvement which will be led by improvement in the revenue mix, premiumization and leveraging its scale benefits.