FMCG major Hindustan Unilever (HUL) on Thursday reported a 41% year-on-year (YoY) rise in its standalone net profit in the March quarter (Q4FY21).
Net profit rose to Rs 21.4 bn from Rs 15.2 bn YoY, exceeding street estimates.
Profits were backed by a lower base and a strong demand for its foods and refreshments portfolio as well as a recovery in categories such as fabric wash.
Revenues for the quarter jumped 34.5% to Rs 119.5 bn from Rs 88.9 bn YoY.
HUL's quarterly profits and revenues beat estimates, as India's largest consumer goods maker continued to recover from the pandemic-driven disruption.
As many as 16 brokerages had expected the maker of Vim dishwash bar and Lux soaps to report net income of Rs 19.7 bn, with revenues estimated at Rs 117.3 bn.
Operating profit jumped 43% to Rs 29.6 bn, while margins expanded to 24.4% from 22.9%.
Other income fell to Rs 1.1 bn in Q4FY21, compared to Rs 2.7 bn in the year-ago period.
HUL's peers Britannia Industries and Nestle India had also reported an increase in revenue, underscoring the recovery in demand, even as they flagged raw material price pressures.
Here's a table comparing HUL's quarterly performance on key parameters.
(Rs m) | Q4FY21 | Q4FY20 | Q3FY21 | YoY (%) | QoQ (%) |
---|---|---|---|---|---|
Net Sales | 119,470 | 88,850 | 116,820 | 34% | 2.30% |
Other Income | 1,090 | 2,660 | 970 | -59% | 12.40% |
Total Expenses | 94,330 | 72,270 | 93,210 | 31% | 1.20% |
Profit before tax | 28,220 | 19,920 | 25,960 | 42% | 8.70% |
Tax | 6,790 | 4,730 | 6,750 | 44% | 0.60% |
Profit after tax | 21,430 | 15,190 | 19,210 | 41% | 11.60% |
HUL's home-care category growth stood at 15%, led by strong recovery in fabric wash.
Household care delivered double-digit growth. Liquids and fabric sensations continued to outperform, benefitting from robust market development initiatives, the company said in a press release.
The beauty & personal care category grew 20% with skin cleansing, hair care, and oral care delivering high double-digit growth.
Skin cleansing performance was led by Lifebuoy and the premium segment.
Meanwhile, the food & refreshment segment grew at 36% in the reported quarter.
Nutrition volumes grew in double digits. The company also launched Rs 2 sachets in Horlicks and Boost. Discretionary and out-of-home categories also witnessed an improvement sequentially.
For the financial year 2020-21, turnover was reported at Rs 453.1 bn, which grew by 18%.
The company reported a net profit of Rs 79.5 bn, up 18% YoY.
The company's board also recommended a final dividend of Rs 17 per share.
Together with interim dividend of Rs 14 per share, the total dividend for the financial year ending 31 March 2021 amounts to Rs 31 per share.
HUL's Chairman and Managing Director Sanjiv Mehta said the in-quarter performance was strong on both the top-line and bottom-line.
He added that the recent surge in Covid-19 cases is of serious concern and ensuring safety and wellbeing of people remains the top priority.
Here's an excerpt of what Aditya Vora, Research Analyst at Equitymaster, wrote about FMCG stocks in one of the editions of Profit Hunter...
You can read Aditya's entire article on this topic here: Is History Repeating Itself in the Stock Market?
Meanwhile, Co-head of Research at Equitymaster, Rahul Shah in November 2020 had recorded a video on why you should skip stocks like HUL and Nestle.
In the video, Rahul discussed why he preferred a little known stock over HUL and how he was proven right. Tune in to find out more...
Shares of HUL opened 0.6% higher today but erased gains later.
Presently, HUL share price is trading down by 2.3%.
FMCG stocks are trading on a mixed note today with shares of Emami and Pidilite Industries among the top losers.
HUL share price touched a 52-week high of Rs 2,504 and a 52-week low of Rs 1,902.
Over the past one year, shares of HUL have gained a mere 5% as compared to 46% gains in the Sensex.
The stock of HUL is presently trading just 6% lower from its record high.
At the current price of Rs 2,351, the P/E ratio for HUL India stands at 69.5 times.
HUL is India's largest fast moving consumer goods (FMCG) company in India with a heritage of over 80 years. HUL was established in 1933 as Lever Brothers and is a British-Dutch manufacturing company.
The company has headquartered in Mumbai, India. The company was renamed as "Hindustan Unilever" in June 2007.
As India's largest consumer goods firm, HUL markets more than 400 brands that include beverages, food, and home and personal care goods.
Some of its names include Kwality Wall's ice cream, Sunlight dish detergent, Lifebuoy and Dove soap, Lipton tea, Pepsodent toothpaste, and Surf laundry detergent.
HUL markets atta, maize, rice, and salt, and its export division ships castor oil and fish. The company also sells bottled water and over-the-counter medications.
The company has more than 20,000 employees. Unilever has over 67% shareholding in HUL.
For more details about the company, you can have a look at HUL's fact sheet and HUL's quarterly results on our website.
For a sector overview, you can read our FMCG sector report.
You can also compare HUL with its peers on our website:
Here are links to some very insightful Equitymaster articles and videos on HUL.
To know what's moving the Indian stock markets today, check out the most recent share market updates here.
Yash Vora is a financial writer with the Microcap Millionaires team at Equitymaster. He has followed the stock markets right from his early college days. So, Yash has a keen eye for the big market movers. His clear and crisp writeups offer sharp insights on market moving stocks, fund flows, economic data and IPOs. When not looking at stocks, Yash loves a game of table tennis or chess.
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