Hindustan Unilever gains ahead of Q1FY19 result; Will FMCG-giant create magic?

The share price of Hindustan Unilever Limited (HUL) was among top picks for investors on stock exchanges, as the company will be announcing its first quarter result for FY19 (Q1FY19). At around 1248 hours, the share price of HUL was trading at Rs 1,770 per piece above Rs 28.85 or 1.66% on BSE. However, in first half of trading session, the share price touched an intraday high of Rs 1,779 reflecting an over 2% surge so far on BSE. Investors are keenly watching the result of HUL as the company was best performer in end of FY18 quarter by surpassing estimates in both bottom-line and top-line growth. One would definitely hope, that HUL once again creates the same magic in Q1FY19. 

In Q4FY18, HUL posted standalone net profit of Rs 1,351 crore up by 14.20% compared to income of Rs 1,183 crore in the corresponding quarter of the previous year. Q4FY18 net profit saw gradual increase of 1.88% from Rs 1,326 crore of preceding quarter. 

The company recorded net sales excluding excise duty of Rs 9,003 crore in the period, registering rise of 2.62% as against Rs 8,773 crore a year ago same period. Q4FY18 net sales surged by 8.17% from Rs 8,323 crore in the preceding quarter. 

Is another strong quarter in the works? 

ICICI Securities said, “We expect HUL to post 12.9% comparable sales growth mainly led by volume growth of 8% as GST rate cut on detergents in November 2017 has led to price cuts by the company during the quarter along with its focus on premiumisation and market share gains. Due to higher raw material and advertisement costs, the operating margin is expected to remain flat at 21.7%. We expect net profit to grow 16.5% to | 1494.6 crore.”

Meanwhile KR Choksey said, “During Q1FY19, we expect HUL to post revenue of around INR 92.8 Bn with 8.9% growth on YoY. EBITDA during the quarter is expected to be around INR 20.5 Bn with 9.9% growth on YoY basis. We expect the EBIDTA margins to improve by 20 bps YoY. PAT during the period is expected to be around INR 14.2 Bn with a growth of 9.8% YoY. PAT margin is expected to improve by 12 bps YoY.”

On the other hand, analysts at Phillip Capital said, “Revenue growth will be driven 12 volume growth.” According to them, Gross margins to remain flat on price-volume equation moderate to low inflation cost. Similarly, EBITDA margins will also remain flat, whereas earnings growth to be similar to EBITDA growth. 

In Prabhudas Lilladher views, “Strong growth momentum to continue. We would watch out for trend in sales of Personal care and margins in Home care.”