HUL is the largest FMCG Company in India, operating across a host of categories in home care, personal care and foods.
ICICI Securities expect HUL to post 12.9% comparable sales growth in Q1FY19 mainly led by volume growth of 8% as GST rate cut on detergents in November 2017 has led to price cuts by the company during the quarter along with its focus on premiumisation and market share gains.
“Due to higher raw material and advertisement costs, the operating margin is expected to remain flat at 21.7%. We expect net profit to grow 16.5% to Rs 14.95 billion,” the brokerage firm said in Q1FY19 result preview.
Analysts at JP Morgan believe a gradual recovery is under way as rural demand stabilises and benefits from lower GST rates (price reduction/grammage increase) start flowing through. Margin tailwinds remain, given mix improvement, manageable input cost inflation, judicious pricing, GST benefits, rational competitive spends and significant cost control measures.
“We believe HUL’s initiatives in the areas of margin-accretive innovation, cost savings and market share gains should hold the company in good stead over the medium term,” the brokerage firm said in investor meet takeaways.