Asianpaint vs Hindunilvr Q1 FY24

Asian Paints reported a strong Q1 FY24 with 10% volume growth on a high base, driven by broad-based demand across geographies and segments. Revenue grew 7% YoY (standalone), aided by double-digit volume growth and a healthy product mix. Gross margins expanded 550 bps YoY to 43.4%, benefiting from raw material deflation and operational efficiencies. The industrial business was a standout with 13% top-line growth, while international operations were mixed due to currency devaluation in Nepal and Bangladesh. Management remains optimistic about the festive season and rural recovery, but flagged potential input cost inflation from rising crude prices. Key risk: sustained weakness in luxury segment and international markets could temper overall growth.

Guidance read

PBDIT margin band of 18%-20% for FY24: Management reiterated commitment to maintain PBDIT margin between 18%-20% for the full year, despite Q1 margin of ~23%. Home decor to reach 7%-8% of decorative sales by FY26: Target for home decor segment to contribute 7%-8% of decorative revenue by end of FY26. Beautiful Homes stores to expand to 65-70 by year-end: Plans to increase Beautiful Homes stores from 44 to 65-70 during the current fiscal year. Capex of INR 8,750 crore over three years: Capacity expansion plan of INR 8,750 crore over three years is on schedule.

Risk read

Key risks include Raw material price resurgence — Crude oil at all-time high and some raw material prices rising could pressure margins if deflation reverses.; Weakness in luxury segment — Luxury paint segment underperformed in Q1, which could persist if consumer sentiment remains cautious.; International business headwinds — Currency devaluation and economic crisis in Nepal, Bangladesh, and Sri Lanka impacted international profitability; recovery uncertain.; Kitchen and bath business slowdown — Kitchen and bath segments saw degrowth due to high base and price increases; management expects improvement but risk of prolonged sluggishness..

Promise ledger

Scorecard data is being built as historical quarters are processed.

HUL reported a resilient Q1 FY24 with underlying sales growth of 7% (UVG 3%) on a high base, despite a challenging operating environment. EBITDA margin improved 40 bps YoY to 23.6%, while PAT grew 8% to INR 2,472 crore. More than 75% of the business gained market share. The company is navigating a transition period as commodity inflation moderates, leading to price reductions and increased competitive intensity. Management expects price growth to be near flat or marginally negative in the next couple of quarters, with volume-led growth. Rural recovery is underway but weather risks (El Niño) remain a key watch. The focus is on rebuilding gross margins and investing in A&P to maintain share of voice. Risk: delayed volume recovery due to trade destocking and consumer pantry adjustments.

Guidance read

Price growth to be near flat or marginally negative in next 2 quarters: If commodities remain at current levels, HUL expects price growth to be near flat or marginally negative, with growth fully led by volume. Volume growth momentum to be sustained: Management expects to sustain volume growth momentum despite transition, supported by price reductions and A&P investments. Gross margin to be rebuilt and invested in A&P: Focus on rebuilding gross margins and investing competitively behind A&P; EBITDA margin will be an outcome.

Risk read

Key risks include Weather uncertainty and El Niño impact — El Niño has set in early, potentially impacting the latter part of the monsoon, which could affect rural demand and agri output.; Resurgence of small and regional players — Moderating commodity prices have led to increased competition from small/regional players, particularly in mass segments and specific regions.; Delayed volume recovery due to trade destocking — Trade destocking of high-priced inventory and consumer pantry adjustments may delay volume recovery by 2-3 quarters.; Sustained inflation in certain commodities — Coffee, cereals, and cleaning powder continue to see high inflation, impacting margins in the Foods & Refreshment segment..

Promise ledger

Scorecard data is being built as historical quarters are processed.