HUL Q3 show strong standalone results, dampened by royalty hike

Hindustan Unilever Ltd (HUL) published its Q3 earnings for the third quarter of the fiscal (Q3FY23). The standalone (without consolidation) net profits have increased by 12% YoY to Rs2,505 crore. Standalone revenues from operations for Q3FY23 were 16% higher at Rs15,228 crores. The good news is that these quarterly numbers are far better than the street estimates. For instance, the consensus street estimate for revenue growth was 13.8%, but actual revenue growth came in at 16% in Q3FY23.  

Similarly, the profit growth for the third quarter was estimated at 8.3% on a YoY basis, but the actual profit growth was 12%
 

To an extent, Hindustan Unilever Ltd (HUL) benefited from higher rural sales in the quarter as well as lower costs on account of crude price tapering. Other input costs are also sharply lower in the quarter. However, this strong performance was somewhat dented by the impact of higher royalties payable to its parent company, Unilever Ltd. This had an impact on the stock price in the immediate aftermath of the results announcement on Thursday. Let us turn to what brokerage thinks about the Hindustan Unilever Ltd (HUL) stock.

Citigroup Global markets have pegged the target price of HUL at Rs3,050, which is 18% higher than current levels. The negative impact of higher royalty has been largely offset by the volume growth in rural markets. Sharekhan reduced the target price of Hindustan Unilever Ltd (HUL) to Rs2,900 per share due to the 80 bps spike in royalty charges. Overall results can be considered satisfactory in a tough quarter, amidst a plethora of global headwinds.

Source: Multiple News Websites