HUL's total income rose over 20% during the quarter under review to ₹14,757 crore as compared to ₹12,260 crore in the corresponding period a year ago. The volume growth was 6%.
“Amidst a rural slowdown and ~20% YoY input cost inflation, HUL delivered a commendable 14% YoY Ebitda growth in 1Q, beating JEFe (& consensus). Notably, the beat was volume-led (+6%) and underpinned by share gains," said Jefferies in a note.
The management cautioned on 2Q margin despite palm oil price correction due to high-cost cover and inflation in other inputs, but the brokerage sees improving earnings outlook in 2H. It has maintained Buy rating on HUL shares and has raised target price to ₹3,050 (From ₹2,520) on the strong beat after a long time.
1Q results showcase HUL's ability to navigate a tough macro environment, delivering industry-leading Ebitda growth. Earnings outlook will likely improve in 2HFY23, led by softening in certain inputs (mainly palm), low base and likely pick-up in rural, it added
As commodity prices flared, fast-moving consumer goods companies raised prices during the quarter. HUL raised prices across categories such as skin cleaning, shampoos and home care products, even as the company saw a strong uptake for its ice creams and fabric-cleaning products.
“Though Q1FY23 performance was in line, we have upward revised our FY23E/24E EPS estimates to ₹43.1/47.9 respectively to factor in easing of RM pressure. Valuing the stock at 58x FY24E EPS to arrive at a target price of ₹2,780. Maintain Accumulate. Buy on dips," said Dolat Capital.
Considering recent increase in RM costs and subsequent prices hikes across categories, the brokerage sees this as a robust performance. In the near term, it believes that the revenue growth would remain price led. However, RM price corrections and subsequent price drops would help improve volume performance in H2FY23E.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
