Sharekhan's research report on Hindustan Unilever
HUL’s Q4FY2023 performance was below our as well as the street’s expectation, with revenue/PAT growing by 11% and 8% y-o-y, respectively (with 4% volume growth). OPM declined by 80 bps q-o-q to 23.3%. Volume growth will recover gradually as falling input prices and a recovery in rural demand will drive growth in the coming quarters. FY2024 revenue growth will largely be volume-led. Falling input prices led to sequential improvement in the gross margins in Q4. The management is confident posting better OPM ahead if commodity prices continue to moderate from current levels.
Outlook
The stock has underperformed broader indices and is trading at 53x/46x its FY2024E/FY2025E earnings. The management is confident of achieving consistent and profitable growth in the medium term. We retain Buy with a reduced PT of Rs. 2,810.
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