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Q3-FY23 Result Update

* Hindustan Unilever Limited (HUVR) has reported a growth of 16.1% in its revenues at ?1,55,970 million in Q3-FY23 as against ?1,34,390 million in Q3-FY22. The growth was ahead of the market with more than 75% of the business winning market shares. The underlying volume growth was 5% in the quarter.

* The company’s EBITDA margins for the latest quarter stood at 23.7% at ?36,940 million as against 25.4% at ?34,090 million in Q3-FY22, a decrease of 168 basis points. The profit after tax (PAT) margins for the company stood at 16.1% at ?25,050 million as against 17.3% at ?23,190 million. The marginal decrease in operating margins were due to inflationary pressures while have improved 30 basis points over sequential quarter.

* In terms of business segments, Home Care segment reported a strong growth of 32% along with double digit volume growth. Both Fabric Wash and Household Care grew in high double-digits with all parts of the portfolio performing very well. Liquids portfolio continued to deliver strong results driven by effective market development actions. Calibrated price increases were taken in Fabric Wash and Household Care portfolios to partly offset the input cost inflation.

* The Beauty & Personal care segment grew 10%. Skin Cleansing delivered strong double-digit growth with volumes growing in mid-single digit. Hair Care grew in high single-digit led by strong performance in Clinic Plus. Oral Care delivered steady performance led by Close-up. Delayed winter impacted growth in Skin Care, however, the non-winter portfolio delivered double-digit growth driven by continued focus on innovations and market development actions.

* The Foods & Refreshment grew 7% driven by Foods, Coffee and Ice-cream. Foods grew in highteens with double digit volume growth followed by Ice Cream with double-digit growth. Tea continued its value and volume market leadership and delivered mid-single digit volume growth. Coffee continues to perform well delivering double-digit growth. Health Food Drinks (HFD) grew in mid-single digit with strong performance in Boost and Plus range. HFD continues to gain market share and penetration on the back of focused market development actions.

* Going ahead in near term, the company expects a gradual recovery in consumer demand as the inflation has peaked. The company continues to remain focused on managing its business with agility, continue growing its consumer franchise whilst maintaining margins in a healthy range. In long term the company continues to focus on its strategy of developing a portfolio by growing ahead of the market, accelerating market development and creating the future market opportunities and also develop under penetrated categories.

* We have updated our estimates factoring in latest numbers, we continue to remain positive on the company in the long run and maintain our BUY rating on Hindustan Unilever Limited (HUVR) with a revised target price of ?2,960 per share.

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