Hindustan Unilever (HUL), a prominent player in the FMCG sector, is set to release its Q4 results tomorrow. While the overall FMCG industry has witnessed a narrowing gap between urban and rural growth, analysts expect HUL to report muted earnings growth, reflecting the challenges faced by the sector.
According to the average estimates of five brokerages, HUL’s revenue is projected to grow by 1.16% to ₹15,067 crore, up from ₹14,893 crore in the corresponding period last year. Volume growth is estimated at 3%. However, the expiration of the GSK consignment arrangement is expected to result in a ₹75 crore hit on sales.
HUL’s Q4 net profit is anticipated to rise by 2.71% to ₹2,538 crore, compared to ₹2,471 crore in the previous year. EBITDA is projected to increase marginally by 0.60% to ₹3,492 crore, while EBITDA margin is likely to remain flat at 23.2%. The increase in ad spend and other expenses may impact profitability.
Analysts from Motilal Oswal Financial Services forecast a 3% YoY domestic volume growth for HUL. They also expect the termination of the distribution agreement for GSK products to affect EBITDA. However, gross margins are anticipated to expand by 150 bps YoY due to lower raw material costs.
Despite the challenges, HUL’s share price has declined by over 15% in 2024. Over the past year, it has dropped by just over 9%. Investors will be closely monitoring the company’s Q4 results for insights into its performance and the outlook for the FMCG sector.
