Hindustan Unilever Limited (HUL) is set to grab attention as it prepares to unveil its financial results for the March quarter (Q4FY25) on April 24. The company’s stock has shown a positive trend, closing at ₹2,422.15 on the BSE, marking an increase of 0.96% on Wednesday. With a notable rise of over 7% this month and a 3% gain in March, investor interest is on the rise.
Current Stock Performance
- HUL’s share price performance over the past year has been modest, with a 7.5% increase, reaching a 52-week high of ₹3,034.50 on September 23 and a low of ₹2,136 earlier this month.
- Despite the gains, the backdrop of subdued consumer demand and fierce market competition raises questions about future earnings.
Expectations for Q4 Results
Industry analysts anticipate another challenging quarter for HUL, citing factors like rising commodity costs and sluggish urban spending. The company has struggled with volume growth for several quarters, leading some experts to predict a flat or low single-digit increase in volume.
- Jefferies forecasts that HUL will report stagnant volumes, positioning it as one of the weaker performers in the FMCG sector.
- The firm noted, “Demand patterns in the March quarter have remained consistent with those from December, with urban markets showing little improvement, while rural areas may experience slight recovery.”
Category Performance Insights
Brokerage firm SMC Global Securities predicts that HUL may face challenges across various product categories, especially in soaps and tea, which could hinder overall revenue growth. They highlight:
- Price reductions in the detergent sector and heightened discounts in home care products could negate any revenue gains from price increases in other segments.
- Expected volume growth remains underwhelming, although segments like home care and hair care may show some positive trends.
Margin Considerations
Raw material inflation, particularly in tea and palm oil, is likely to exert pressure on gross margins. SMC Global anticipates:
- EBITDA margins could remain stable year-over-year, aided by lower advertising and staffing costs, alongside marginally improved operational efficiency.
Future Outlook
Atul Parakh, CEO of Bigul, suggests that after experiencing a 1.6% revenue growth in Q3, expectations for Q4 indicate a modest improvement with a projected 2% year-on-year revenue increase. This growth is expected to stem from a 1.4% rise in prices due to strategic adjustments in the soaps and tea categories.
- Parakh emphasizes that while urban demand has cooled, a gradual recovery in rural areas is crucial. He advises investors to pay close attention to management’s strategies for Q1FY26, particularly regarding how the company plans to leverage potential increases in consumption resulting from recent tax relief measures implemented by the central government.
As HUL approaches its quarterly results, market watchers will be keenly observing not just the numbers, but also the insights shared during the earnings call.
