HUL and JSW Steel are the focus after Q2 results. what analysts say

Markets will remain closed on Mondays next week due to Diwali celebrations across India.

Hindustan Unilever (HUL):

This FMCG The giant delivered a strong performance in the quarter with turnover growth of 16% and underlying volume growth of 4%. On a standalone basis, HUL earned a net profit of 2,616 crore with a growth of 19.6% from 2,187 crore in Q2FY22. Revenue from operations increased 15.9% to . done 14,751 crore as against 12,724 crore in the same quarter last year. EBITDA margin remained healthy at 23.3% despite unprecedented inflation in input cost. YoY EBITDA margin declined by 180 bps.

Also, the company declared interim dividend of 17 per equity share of face value of Re 1 each for the financial year ending March 31, 2023. The company has set November 2 as the record date for determining shareholders eligible for the dividend while payment is planned or after November 17.

Amnish Agarwal – Head of Research – Prabhudas Lilladher informed that in the home care segment, the company registered double digit growth with Fabric Wash and Household Care growing in high double digits. While the beauty and personal care segment was led by outperformance in the premium portfolio. Skin Cleansing delivered strong double-digit growth led by Beauty and Premium Brands.

In addition, the analyst pointed out that solid performance in foods, coffee and ice cream led to an increase in foods and refreshments. Foods delivered strong double-digit growth as volume increased in the mid-teens. Additionally, calibrated value has been taken across all categories to partially offset significant inflation in input costs.

On valuation, Agarwal said, “High-value inventory in the quarter came into the system, leading to sharp gross margin slippage of 580bps YoY to 45.8%. EBITDA margin at 22.9% was driven by cut in advertising spend (250bps) and lower Other expenses (180 bps). We expect inflationary pressure to peak and expect gradual margin recovery. We will revisit our numbers after earnings. We have TP of Rs 2827. With is an accumulated rating on the stock.

HUL shares closed on BSE 2,655.05 each, an increase of 2.11%. The company’s market valuation is approx. 6.24 lakh crore.

Year-to-date, the stock has climbed over 12% on Dalal Street. HUL shares have gained over 8 per cent in one year.

JSW Steel:

In the second quarter of FY23, JSW Steel posted a net loss of 915 crore as compared to profit of 7,179 crore in Q2FY22. The company’s PAT was 839 crore in Q1FY23.

However, the company posted an increase in consolidated revenue. 41,122 crore in Q2FY23 as against 31,909 crore in Q2FY22 and 37,500 crore in Q1FY23.

JSW Steel said, the domestic steel industry witnessed demand growth with consumption of 27.93 million tonnes in Q2FY23, supported by 13% yoy and 1.6% qoq supported by a strong automotive sector and demand from the infrastructure sector.

However, exports were turned unattractive after imposition of export duty on finished steel products in May this year, Q2FY23 exports from India were down by 1.41 million tonnes — 66.4% yoy and 35.6% qoq.

JSW Steel’s overall consolidated steel production stood at 5.66 million tonnes and salable steel sales at 5.74 million tonnes in Q2FY23.

On JSW Steel, Mitul Shah – Head of Research at Reliance Securities said the company reported a performance of 2QFY23 with EBITDA margin of 4.2%, lower than their estimate of 11.1%.

Reliance Securities expert said, “Revenue grew 29% YoY (up 10% QoQ) to Rs 418 billion as against our estimate of Rs 392 billion. Sales volume grew a healthy 32% YoY (24% QoQ) to 5.01mnT ; 4.2% higher than our estimate of 4.81 mt. Realization declined sharply 12% YoY and 16% QoQ to Rs 64,858 per tonne, roughly in line with our estimate of Rs 64,681 mt.

Further, he added, “EBITDA grew by 83% year-on-year and 59% QoQ to Rs 17.5 billion, which is 60% lower than our estimate of Rs 43.7 billion on account of RM prices, while margins rose by 4.2%, up by 695 bps to Rs. was below estimates.

On the company’s valuation, Shah said, “JSW Steel reported lower realizations during the quarter. Sales volumes were higher than our estimates, but EBITDA came under immense pressure due to higher costs. JSTL is the fastest growing Indian steel sector. The company has been a growing company at 10.3% / 9.5% CAGR in the last 11 years in capacity and volume. The company has the lowest conversion cost within India and is much higher than its global peers. We currently have stock on Buy rating.

JSW Steel shares closed on BSE 622 each, down 1.03%. The company’s market cap is over 1.50 lakh crore.