Key Insights

  1. HUL reported Quarter 2 FY20 sales at Rs97bn (+6% YoY) and EBITDA at Rs24.4bn (+21% YoY) driven by better gross margin.
  2. HUL’s Quarter 2 FY20 performance has been resilient in light of the challenging demand environment
  3. Quality of the earnings growth seems to be good – HUL has achieved this despite investments behind innovations / brand spends (8% increase in ad spends) and on data/IT capability building. Drivers for the healthy margins incl. - a) better revenue mix / premiumization, b) aggressive cost savings, c) benign input/packaging costs across home/beauty & personal care, and d) operating leverage (many fixed cost items are growing <7%).

Outlook: Best-of-breed earnings visibility and by far highest return ratios justify premium valuations.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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