Hindustan Unilever Limited (HUL), the largest FMCG company of the country, will publish its financial results for the quarter ending December 2015 on January 15. Analysts does not expect a blockbuster performance from the top consumer goods firm despite Q3 being the best quarter for the company historically.
Revenue growth: HUL is one of the big profit contributors that is likely to report below average results. IIFL estimates the company to register net revenue of Rs. 8513 crore, a 9.5 % growth y-o-y while 7 % q-o-q. The EBIDTA margin is likely to stand at 17.5 %, a 0.4 bps change y-o-y and a 0.8 bps change q-o-q. The net profit is estimated at Rs. 1054.3 crore, registering a 15.8 % growth y-o-y while 9.6 % growth q-o-q. Moreover, analysts HUL to see the highest gross margin impact as well as earnings sensitivity.
Premiumization to drive revenue growth: HUL is likely to benefit the most under the premiumization. Premiumization continues to remain resilient as the companies dealing in the FMCG segment does not witness any slowdown in the category.
Rural and urban spending gap is converging: IIFL estimates HUL, despite an urban focus, remain impacted by high competition given the relatively mass nature of their key product segments.
Acquisition of Indulekha and leading position in Personal Care: Hindustan Unilever announced in December that it has signed an agreement with Mosons Group to acquire its flagship brand 'Indulekha'. The company plans to secure a leading position in Personal Care especially the premium Naturals segment.
Advertisement/Promotions Spend: Due to the tough competition among brands and increased investments by HUL, the company’s ad spend is likely to impact the margins. ET report expects HUL's advertising spend to stand at 14.5 per cent of its revenues.
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