Hindustan Unilever (HUL) is expected to have a stable performance in Q3FY24 results, with market volumes recovering to mid-single digit level compared to their base period figures due to continued market share.
The company showed a decent performance in Q2FY24 with topline and volumes improving, although it missed targets due to unseasonal rains and delayed festival season.
“While the urban sector was leading growth for the FMCG market by 3 per cent YoY, the rural sector’s demand remained subdued. The demand trend is expected to remain stable in Q3FY24, with market volumes recovering to mid-single digit level compared to their base period figures due to continued market share,” said Parth Shah, Research Analyst, StoxBox.
The price growth might tail off, given the lower input costs that fast-moving consumer goods (FMCG) players continue to pass to their customers, he stated.
Shah expects that the food and refreshment segment might decline due to sustained input cost inflation in the coffee and health food drinks (HFD) category.
“When analyzing segment performance, Home Care and BPC may post single-digit revenue growth compared to food and refreshment due to inflation in input prices in the segment,” he said.
The firm expected earnings before interest, taxes, depreciation and amortisation (EBITDA) margins to have a single-digit growth driven by the home care and BPC segments.
“We expect moderating inflation to improve customer sentiment as we advance. However, heightened competition in the industry and volatile global prices may keep the volume recovery gradual,” Shah underlined.
