Hindunilvr vs Asianpaint Q1 FY25

HUL reported Q1 FY25 revenue of INR 15,166 crore with 4% underlying volume growth, while underlying sales growth was 2% due to negative pricing. EBITDA margin improved 20 bps YoY to 23.8%, and PAT grew 3% to INR 2,538 crore. Volume growth was led by Home Care (high single-digit) and Hair Care (double-digit), while Personal Care saw low single-digit volume recovery after pricing actions. Management highlighted green shoots in rural demand but remains cautious on monsoon and food inflation. Guidance: near-zero pricing in short term, low single-digit positive by year-end; EBITDA margins to be maintained at current levels in near term, with modest expansion in medium term via mix improvement and operating leverage. Risk: tea inflation and potential impact on margins if commodity prices rise.

Guidance read

Near-zero pricing in short term, low single-digit positive by end of FY25: Excluding one-off credit in Q2 FY24 base, intrinsic price growth expected near zero in short term, turning low single-digit positive by year-end. EBITDA margins to be maintained at current levels in short term: Management expects to maintain current EBITDA margin levels (~23.8%) in the near term, with modest expansion in medium term. Modest margin expansion in medium term via mix and operating leverage: Medium-term margin expansion driven by premiumization (300 bps improvement in premium mix over 3 years) and operating leverage from volume growth. Market share breadth to reach 60% by end of calendar year: MAT business winning metric expected to return to 60% levels by end of calendar year, with last 3-month metric already at ~55%.

Risk read

Key risks include Tea price inflation could impact margins — Tea prices are currently inflationary due to harsh summer impacting produce; full impact depends on monsoon season.; Rural recovery may be slower than expected — Despite green shoots, rural growth on a 2-year CAGR still lags urban; employment, real wages, and food inflation could delay recovery.; Competitive intensity in beauty and personal care — Analyst raised concern about competitive activity in beauty; management acknowledged intense competition but expressed confidence in portfolio transformation.; Potential margin pressure from commodity volatility — If commodity prices rise, especially palm oil, margins could be impacted despite Stratos technology providing some insulation..

Promise ledger

Of 2 tracked promises, management 0 met, 0 close, 2 missed.

Asian Paints reported a challenging Q1 FY25 with standalone revenue declining -3% YoY and volume growth of 7% (vs 10% last year), missing the double-digit target. The weak performance was driven by heatwaves, general elections, and adverse product mix (higher share of lower-margin economy products). Gross margins contracted to 42.9% due to raw material inflation and mix. Management noted a recovery in June and expects double-digit volume growth in Q2, aided by festive demand and rural uptick. However, employee costs surged 23% YoY due to hiring for distribution expansion, pressuring EBITDA. Risks include sustained input cost inflation (1.8% in Q1, further 1.5% expected) and potential demand slowdown in real estate. The company has taken a 1% price hike and may take more, but the value-volume gap is expected to remain at 5-6%.

Guidance read

Double-digit volume growth expected in Q2 FY25: Management expects volume growth to return to double digits in Q2, driven by festive season and rural recovery. Further price increases of ~1.5% expected: Management anticipates additional raw material inflation of 1.4-1.5% in Q2 and will take further price hikes accordingly. Value-volume gap to remain at 5-6%: The gap between volume growth and value growth is expected to stay in the 5-6% range, aided by price increases and mix improvement.

Risk read

Key risks include Sustained raw material inflation — Input costs rose 1.8% in Q1 and are expected to rise another 1.5% in Q2, pressuring gross margins if price hikes are not fully passed through.; Employee cost overhang — Employee costs surged 23% YoY due to hiring for distribution expansion, and management indicated these costs will persist, potentially weighing on EBITDA margins.; Adverse product mix from rural growth — Higher growth in economy segments (distempers, Neo Bharat) and slower premium sales could continue to drag value growth and margins..

Promise ledger

Of 3 tracked promises, management 0 met, 0 close, 3 missed.