Hindunilvr vs Asianpaint Q2 FY25

HUL reported a muted quarter with 2% underlying sales growth (3% volume growth) in a sluggish FMCG environment. Revenue stood at INR 15,319 crore, while EBITDA margin remained healthy at 23.8%. PAT before exceptional items declined 2% due to a one-off tax credit in the base. Home care and beauty & wellbeing delivered high single-digit growth, but personal care declined 5% and foods & refreshment was subdued. Management highlighted early signs of recovery in soaps post-Stratos technology launch and expects low single-digit price growth in the near term. The ice cream business is being separated to sharpen focus. Risks include persistent commodity inflation (palm oil, tea) and muted urban demand. The company maintains its margin guidance and expects stable demand trends.

Guidance read

Low single-digit price growth expected in near term: Management expects low single-digit price growth in the coming quarters due to commodity inflation, while maintaining competitive price-value equation. EBITDA margin to be maintained at current healthy levels: Management aims to keep EBITDA margin at current ~23.8% levels, with some basis points fluctuation, through productivity savings and calibrated pricing. Ice cream business separation by end of FY25: Board approved separation of ice cream business; mode (sale or demerger) to be decided by end of the year, with listing expected. Full-year effective tax rate marginally above 26%: ETR for H1 was 26.1%; full-year ETR expected to be marginally above 26%.

Risk read

Key risks include Commodity inflation pressure — Crude palm oil and tea prices rose 10% and 25% YoY respectively, impacting gross margins. Management is taking calibrated price increases but full pass-through may not be possible.; Muted urban demand and slow rural recovery — Urban growth moderated, while rural recovery is gradual. Management noted no further acceleration in FMCG growth, which could pressure volume growth.; Personal care segment decline persists — Personal care declined 5% with low single-digit volume decline. Despite formulation changes and innovation, recovery may take a couple more quarters.; Tea downgradation trend may not reverse quickly — Despite 25% tea inflation, downgradation to loose tea persisted in Q2. Management expects reversal but timing is uncertain..

Promise ledger

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

Asian Paints reported a muted Q2 FY25 with decorative volume growth flat and value declining 6.7% YoY, impacted by weak consumer sentiment, extended monsoons, and intense competition. Consolidated revenue fell 5.5% YoY, with industrial business growing 6% partially offsetting. Gross margins contracted 280bps due to raw material inflation and unfavorable mix, while PBIT margins dropped 530bps to 16.4% from higher employee costs and discounting. Management guided for single-digit volume growth in H2, with cautious near-term outlook due to a high base and muted October. Risks include sustained competitive intensity, potential crude volatility, and slower-than-expected demand recovery. The company is investing in brand refresh, innovation (12% revenue from new products), and dealer ROI initiatives to drive long-term growth.

Guidance read

Single-digit volume growth for FY25: Management expects single-digit volume growth for the full year, with H2 likely to see improvement in Q4. PBIT margin band of 18-20% for H2: Management aims to keep PBIT margins in the 18-20% range for H2, supported by price increases and potential raw material deflation. Price increase of 1.2% to fully reflect in Q3: The 1.2% price increase taken in Q2 will fully impact Q3, aiding margin recovery.

Risk read

Key risks include Sustained competitive intensity — Existing and new players are increasing discounting and dealer incentives, potentially pressuring market share and margins.; Raw material cost volatility — Crude oil and titanium dioxide prices remain uncertain due to geopolitical tensions, which could delay expected deflation.; Slower demand recovery in H2 — Management is cautious on Q3 due to a high base and muted October, with recovery dependent on wedding season and government spending.; Impairment and forex losses — Exceptional items of ~₹256 crore (impairment of White Teak/Weatherseal and Ethiopia forex loss) indicate challenges in home décor and international operations..

Promise ledger

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