HUL Q3 earnings on Thursday; here’s what to expect

NEW DELHI: FMCG heavyweight Hindustan Unilever will release its December quarter earnings on Thursday, and investors will be keenly looking out for comments on volume growth and consumer demand environment.

Since rural growth of key FMCG segments, including detergents, toilet soaps, hair oils, shampoos, fairness creams and toothpaste witnessed an uptick last year, company's pace of rural recovery will also be a major point of focus.

Similarly, the market will monitor the performance of Lever Ayush and oral care.


HUL had beaten Street estimates in its second quarter earnings by reporting a 19 per cent jump in profit after tax (PAT). Brokerages are now expecting it to maintain its growth trajectory for this quarter as well.

“HUL may maintain three years’ average volume growth trajectory of earlier quarters," said brokerage Edelweiss Securities.

The brokerage expects revenue, EBITDA and PAT to grow nearly 9 per cent, 18 per cent and 4 per cent, respectively, on a year-on-year (YoY) basis. "We expect HUL to record nearly 6-7 per cent volume growth on a high base of 11 per cent growth, the brokerage said.

The tax rate of 30 per cent for the quarter compared to about 21 per cent in the base quarter may keep profit subdued.


Brokerage Motilal Oswal Securities expects similar numbers for HUL for December quarter.

It expects HUL's revenue to grow 10 per cent, with underlying domestic volume growth of 6 per cent in third quarter, while operating margin may expand by 150 basis points to 21.1 per cent, leading to EBITDA growth of 18.4 per cent.

"Adjusted PAT is likely to grow 17.8 per cent to Rs 1,410 crore," the brokerage said.

As per Kotak Institutional Equities, HUL's adjusted PAT may rise 2.7 per cent sequentially and 30.4 per cent yearly.

The brokerage estimates EBITDA to jump 28.3 per cent YoY and 6.7 per cent QoQ.

FMCG firms have a tailwind in terms of soft crude oil prices. Prices of most crude linked derivatives have eased sequentially and the benefit of it is expected to reflect from the fourth quarter.

Brokerages are positive on volume growth of consumer goods companies.

"We expect volume growth of consumer goods companies to sustain on account of farm loan waivers, MSP hikes, increasing direct distribution, muted growth of Patanjali, etc. Upcoming general and state elections will further boost consumption," Edelweiss Securities said.