HUL shares trade higher ahead of Q3 numbers. Here’s what to expect

Shares of FMCG major Hindustan Unilever Limited were trading higher ahead of its numbers for the quarter ended December 2023.

The stock rose 1 per cent to hit a day’s high of Rs 2691.25 on BSE on January 18, 2023. The company will report its numbers on January 19, 2023, and is likely to post a double-digit topline growth.

According to Philip Capital, HUL’s revenue may rise by 16 per cent and profit is expected to increase 10 per cent on a year-on-year basis. HDFC Securities expects net revenue growth of 14% YoY and profit after-tax growth of 8.7 per cent.

Analysts expect the Ebitda margin to contract by over 150 bps owing to higher advertising and promotion spending and fuel inflation. Gross margins are expected to improve sequentially owing to a correction in PFAD price and calibrated price hikes.

According to HDFC Securities, HUL is expected to see 5% volume growth despite the rural slowdown, downtrading owing to a favourable base for personal care business, and strong growth in urban areas.

“Home care is expected to witness 23% sales growth given the company has taken price hikes in the last one year.  The beauty and personal care segment is estimated to post 5.3% sales growth as the company has passed on the benefits of the palm oil price decline in terms of price cuts in soaps in October 2022. The food and refreshment segment is expected to see a growth of 2.3% mainly due to price deflation in the tea segment,” ICICI Direct said in its recent report.

“During the quarter, crude prices witnessed a sharp correction. This, along with a decline in palm oil prices earlier gave FMCG companies the opportunity to take price cuts & grammage restoration to pass on the benefit,” it added.

Shares of HUL hit its 52-week high of Rs 2,741 on December 09, 2022, and a 52-week low of Rs 1,901.80 on March 08, 2022. The stock ended at Rs 2666.40 on January 17, 2023.

HUL reported a 19.61 per cent year-on-year (YoY) rise in standalone net profit at Rs 2,616 crore for the quarter ended September 2022 compared with Rs 2,187 crore in the same quarter last year. Sales for the quarter rose 16 per cent YoY to Rs 14,514 crore from Rs 12,516 crore, the company said in a BSE filing.

Recently, the company announced its foray into the ‘Health & Wellbeing’ category through strategic investments in Zywie Ventures Private Limited (“OZiva”) and Nutritionalab Private Limited (“Wellbeing Nutrition”). ‘Health & Wellbeing’ in India has a total potential market size of Rs 30,0001 crore.