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View Promises →Hindunilvr Ltd — Q3 FY24
HUL reported a resilient quarter with 2% underlying volume growth and EBITDA margin of 23.7%, up 10bps YoY.
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HUL reported a resilient quarter with 2% underlying volume growth and EBITDA margin of 23.7%, up 10bps YoY. Revenue was flat due to negative price growth of 2%, driven by price cuts in Home Care and BPC. The F&R segment saw low single-digit volume decline due to tea downgrading and coffee inflation. Management highlighted that 60% of business is winning market share on a MAT basis, though this is expected to dip below 60% for a couple of quarters. Premium portfolio grew 2.5x faster than mass. A&P spend was up 33% YoY in 9M FY24. Guidance: expect gradual rural recovery, marginal negative price growth in Q4, and continued investment in brands and capabilities. Risk: rural demand recovery may be slower than expected if winter crop yields disappoint.
HUL ने इस तिमाही में अच्छा प्रदर्शन किया। बिक्री की मात्रा (volume) में 2% की बढ़ोतरी हुई। कंपनी की कमाई (EBITDA margin) 23.7% रही, जो पिछले साल से थोड़ी ज्यादा है। कुल कमाई (revenue) स्थिर रही क्योंकि होम केयर और ब्यूटी प्रोडक्ट्स की कीमतें घटाई गईं, जिससे कीमतों में 2% की गिरावट आई। खाने-पीने के सामान (F&R) की बिक्री थोड़ी कम हुई, क्योंकि चाय की कीमतें गिरीं और कॉफी महंगी हुई। कंपनी का 60% कारोबार बाजार में हिस्सेदारी बढ़ा रहा है, लेकिन अगली कुछ तिमाहियों में यह 60% से नीचे आ सकता है। महंगे प्रोडक्ट्स (premium) की बिक्री सस्ते प्रोडक्ट्स से 2.5 गुना तेजी से बढ़ी। विज्ञापन पर खर्च 33% बढ़ा। आने वाले समय में गांवों में मांग धीरे-धीरे सुधरेगी, लेकिन अगर सर्दियों की फसल खराब हुई तो यह सुधार धीमा हो सकता है।
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Rural demand recovery slower than expected
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Underlying Volume Growth (UVG)
2%
Flat vs prior quarter
Overall UVG was 2% for Q3 FY24, with Home Care and BPC seeing mid-single digit growth, while F&R declined low single digit.
Business Winning (MAT)
60%
Expected to dip below 60%
60% of HUL's business is winning value market share on a MAT basis, but management expects this to dip below 60% for a couple of quarters before recovering.
Premium Portfolio Growth vs Mass
2.5x
2.5x faster than mass
On a YTD basis, premium portfolio (RPI >120%) grew at more than 2.5 times the rate of the mass portfolio.
A&P Spend Growth (9M FY24)
33%
+33% YoY
Absolute A&P investments in the first nine months of FY24 were 33% higher than the same period last year, amounting to nearly INR 400 crore increase.
What Changed vs Last Quarter
NEW
Marginal negative price growth expected in Q4 FY24
If commodity prices remain at current levels, management expects underlying price growth to be marginally negative in the March quarter.
NEW
Business Winning metric to dip below 60% then recover
The MAT business winning metric is expected to dip below 60% for a couple of quarters before recovering above 60% in the second half of calendar 2024.
NEW
Continued step-up in A&P and capability investments
Management plans to further increase investments behind brands, innovation, and digital capabilities, funded by gross margin expansion.
UPDATED
EBITDA margins to remain in healthy 23-24% range
Management aims to maintain EBITDA margins at current healthy levels, with a focus on gross margin improvement back to pre-COVID levels.
DROPPED
Price growth to be marginally negative if commodities stay
Management expects price growth to turn marginally negative in the near term if current commodity prices hold.
DROPPED
Volume recovery expected to be gradual
Management expects volume recovery to continue gradually, supported by moderating inflation and festive season.
NEW RISK
Rural demand recovery slower than expected
Rural consumer sentiment remains subdued due to lower agriculture yields and income uncertainty; recovery pace depends on winter crop yields and government spending.
NEW RISK
GSK distribution income loss from Q1 FY25
The termination of the GSK distribution agreement will result in the loss of approximately INR 300 crore annual income, impacting margins from next quarter.
NEW RISK
Tea downgrading persists despite market share gains
Consumers continue to downgrade from branded tea to loose tea due to price differentials, pressuring F&R volumes despite value and volume market share gains.
RISK GONE
Uneven monsoon impact on rural demand
Uneven monsoon with 6% deficit and lower reservoir levels could affect kharif harvest and rural incomes.
RISK GONE
Sustained inflation in HFD and coffee inputs
High milk and coffee prices continue to pressure volumes in HFD and coffee, with no near-term relief expected.
RISK GONE
Global commodity price volatility
Crude oil above $90 and geopolitical tensions could reverse input cost deflation, impacting margins.
🤫 Topics management stopped discussing
Mentioned in Q1 FY24, Q2 FY24
Management expects price growth to turn marginally negative in the near term if current commodity prices hold.
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Guidance and risk preview
If commodity prices remain at current levels, management expects underlying price growth to be marginally negative in the March quarter.
Rural consumer sentiment remains subdued due to lower agriculture yields and income uncertainty; recovery pace depends on winter crop yields and go...
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