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HUL’s results on Wednesday will demonstrate if consumer firms are seeing a recovery in demand, particularly in rural areas. Photo: Pradeep Gaur/Mint
HUL’s results on Wednesday will demonstrate if consumer firms are seeing a recovery in demand, particularly in rural areas. Photo: Pradeep Gaur/Mint

HUL Q3 results today: What to look out for

Hindustan Unilever Ltd (HUL), India's largest consumer packaged goods firm, will announce its results for the December 2017 quarter today

Mumbai: Hindustan Unilever Ltd, India’s largest consumer packaged goods firm, will announce its results for the December 2017 quarter on Wednesday. Markets are anticipating growth in HUL’s revenues and volumes, given that the company surpassed Rs3 trillion in market cap in Tuesday’s trading session.

Urban versus rural growth

HUL’s results on Wednesday will demonstrate if consumer firms are seeing a recovery in demand, particularly in rural areas. Key numbers to look out for include HUL’s underlying volume growth (UVG) and the management’s comments on how rural markets have grown versus urban markets. With the Union budget coming up—the last before the 2019 general elections—these results will show whether calls for rural sops are justified, given how sluggish growth in rural incomes and demand has remained.

Low base effect

Equities brokerage firms are expecting spectacular numbers from all FMCG firms because of this quarter’s base effect—demonetisation severely reduced all consumer firms’ revenues and bottomline in the December 2016 quarter.

Crude prices

Meanwhile, rising prices in crude and crude-linked inputs (such as light liquid paraffin and other oils) has been flagged off as a concern for FMCG margins in several brokerage reports. While crude prices will affect everyone in the industry as it directly influences costs of packaging and transportation, markets will look for management commentary from HUL on how it plans to manage input cost pressure and where prices of the crude commodities basket will move in the future.

Ayurvedic products

Given the surge of demand for “natural" and Ayurvedic products (largely led by Baba Ramdev’s Patanjali), markets will look for performance of HUL’s naturals brands and variants, particularly the newly launched Lever Ayush that is now available across the country.

Premium products

Finally, markets will expect management commentary on how HUL’s focus on premiumization is paying off. A long-standing trend to help improve margins, premium products have seen maximum growth in India’s FMCG market as incomes rise across the country and companies prefer to focus on the segment as well. HUL’s home care segment has been heavily depending on growth in premium products like Surf Excel, a trend that is expected to continue.

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