HUL Q4 Results Review: Net Profit Rises 41%; Double-Digit Growth Across All Segments

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.

HUL Financial Performance

(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%

Data Source: Company Presentation

Double Digit Growth Across All Business Segments

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.

HUL's FY21 Performance

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.

• "Despite challenging times, in FY'21 our business ecosystem has withstood the disruption and demonstrated agility and resilience across the value chain. We have delivered on our multi stakeholder business model. Our purpose-led brands and capabilities were further strengthened during the year and this positions us well to serve our consumers during this turbulent period."

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.

Equitymaster on FMCG Stocks...

Here's an excerpt of what Aditya Vora, Research Analyst at Equitymaster, wrote about FMCG stocks in one of the editions of Profit Hunter...

• When the markets bottomed out in less than a month and started rising, the pundits who experienced the 2008 crash, said it was a 'temporary rise' or a 'dead cat bounce'. They said the fall would accelerate.
  
  In hindsight, they were wrong ...
  
  We saw the fastest recovery in the history of financial markets.
  
  The talk of the town during the crash was portfolio rebalancing to defensive plays. Stocks like HUL, Marico, Dabur, Britannia, etc.
  
  And rightly so.
  
  After all, while sitting at home, it was natural to consume more biscuits and chyawanprash.
  
  These resilient FMCG stocks fell the least and rallied the most till the lockdown was lifted in June when life started to crawl back to normalcy.

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...

How Stock Markets Reacted to HUL's Q4 Numbers...

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.

About HUL

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:

HUL vs P&G Hygiene

HUL vs Godrej Consumer

HUL vs Pidilite Industries

HUL vs Marico

HUL vs Bajaj Consumer Care

Recommended Readings on HUL

Here are links to some very insightful Equitymaster articles and videos on HUL.

• Why ITC and not HUL is my Idea of a Good Investment Right Now
• How Kotak Bank and HUL Became Crorepati Stocks
• Crash Alert! Is There a Big Bubble in Nestle, HUL and Asian Paints?
• Why I Prefer this Niche FMCG Smallcap Stock Over Nestle
• The 13-Year Coma of Hindustan Unilever Shares...
• Is it time to sell HUL and buy SAIL?

To know what's moving the Indian stock markets today, check out the most recent share market updates here.