BackWhat to look for in HUL earnings today
What will work well for HUL is the prediction for an above normal monsoon this year which will aid rural demand
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Mumbai: The country’s largest consumer packaged goods company by sales, Hindustan Unilever Ltd (HUL), is expected to announce its fourth quarter earnings on Monday. While the revenues in the March quarter will be hit by weak monsoon that led to a drop in rural income and the acute water crisis, it would be interesting to hear the company comment on the expected pick-up in demand across the urban and rural markets.
What will work well for the maker of Lux and Dove soaps, Surf detergent and Knorr soupy noodles is the prediction for an above normal monsoon this year which will aid rural demand.
Besides, acceleration in nominal gross domestic product growth, higher disposable income driven by the 7th pay commission and ‘One Rank One Pension’ disbursement are likely accelerate the overall sector’s revenue growth in fiscal 2017.
For the March quarter, expectations are that the Indian arm of Unilever Plc will see volume growth of 6%, similar to what it has seen in the preceding three quarters of the fiscal year. However, revenue growth will be less, in the range of 4-5%, given the deflation due to fall in input costs.
Nearly 45% of HUL’s portfolio is under competitive threat from Patanjali, said analysts Anand Mour and Anirudha Joshi of ICICI Securities Ltd in a report on 6 April, adding that in an inflationary environment it could impact earnings, more so if Patanjali adopts an aggressive pricing strategy.
As such, any statements on how the company perceives spiritual companies like Baba Ramdev’s Patanjali Ayurved and their strategy for competing in natural, herbal and ayurveda products would be welcome.
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