HUL Q1 Review - Broad-Based Growth, Yet Margin Under Pressure: Centrum Broking
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Centrum Broking Report
Hindustan Unilever Ltd.’s Q1 FY22 numbers came in lower than our estimates.
Including GlaxoSmithKline Consumer Healthcare Ltd., revenue/ Ebitda/adjusted profit after tax grew 12.8%/7.7%/4.4% YoY.
The domestic business grew 12%, backed by 9% volume growth.
Health, hygiene and nutrition (85%) grew 8%, while discretionary (12%) grew 39%. The out-of-home business (3%) grew 91%, albeit on lower base.
Gross margin contracted 139 basis point to 50.4% due to inflationary costs in top-three commodities – tea, crude oil and palm oil.
The rise in employee cost (up 4.4%), ad-spend (up 28.5%) and other expenditure (up 5.6%) restricted HUL's Ebitda growth at 7.7%, while Ebitda margin shrank 114bp to 23.9%.
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