HUL Q3 Earnings Preview: Brokerages Vary On Volume Growth
Sachets of HUL’s Surf detergent are displayed at a store. (Photographer: Prashanth Vishwanathan/Bloomberg)

HUL Q3 Earnings Preview: Brokerages Vary On Volume Growth

Brokerages offered varying volume growth estimates for India’s largest consumer goods maker, aided by quicker economic recovery in the hinterland, among other factors.

Nirmal Bang pegged Hindustan Unilever Ltd.’s volume growth at 4% in the three months through December, excluding its acquisition of Glaxosmithkline Consumer Healthcare Ltd., while Motilal Oswal projected the metric at 17% by including volumes of the maker of Horlicks malted drink and Eno antacid.

The company’s net profit for the three-month period is seen at Rs 2,052.5 crore, according to a consensus forecast of analysts tracked by Bloomberg, compared to Rs 1,616 crore during the same period a year ago.

Other Highlights (YoY)

  • Revenue seen at Rs 11,276 crore vs Rs 9,808 crore.
  • Operating profit expected to be Rs 2,896.2 crore vs Rs 2,445 crore.
  • Margins projected at 17.7% vs 16.5%.

Gradual recovery in the high-margin discretionary portfolio and synergies from Glaxosmithkline Consumer would be key drivers of HUL’s medium-term earnings growth, Motilal Oswal said in a preview.

“Holistically, rural growth continues to outpace urban growth despite the latter’s sequential improvement,” Nirmal Bang said in its preview on the FMCG sector. It also said prices of raw materials like palm and edible oils have risen during the third quarter as have those of crude oil and its linked commodities.

The company hiked prices of its soaps by 3% earlier this month to offset as raw material costs rose.

What To Watch Out For:

  • Volume guidance.
  • Commentary on price hikes.
  • New product launches.
  • Commentary on downtrading.
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