Hindustan Unilever hits new high ahead of Q1 results

HUL
Shares of Hindustan Unilever (HUL) hit a new high of Rs 1,770 per share, up 1.6% on the BSE in intra-day trade so far on Monday, ahead of its results for the June quarter (Q1FY19) later in the day.

Since May 14, 2018, after March quarter (Q4FY18) results, HUL has outperformed the market by surging 17.5% as compared to 2.8% rise in the S&P BSE Sensex. Thus far in the calendar year 2018, the stock of fast moving consumer goods (FMCG) company has rallied 29% against 7.3% gain in the benchmark index.

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.


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