HUL Q4FY18 results preview: Pick‐up in rural demand to aid performance

Market News - Hindustan Unilever (HUL) is likely to announce its fourth quarter results later in the day today. According to analysts, HUL will gain from: 1) expected pick‐up in rural demand; 2) lower goods and service tax (GST) rates on more than two-third of its portfolio; and 3) benefits from sustained cost‐savings programs.

In the previous quarter (Q3FY18), the company, reported 28% year-on-year (YoY) rise in net profit at Rs 13.26 billion. The FMCG major had reported a net profit of Rs 10.38 billion in the corresponding quarter last year.

On a year-to-date basis, the stock has rallied around 9.6% and has outperformed the Nifty FMCG index that gained around 6% during this period, ACE Equity data shows. By comparison, the Nifty50 index has gained around 3% YTD.

Here’s what leading brokerages expect from the company in the March 2018 quarter.
PRABHUDAS LILLADHER
HUL should drive strong growth, given depth and breadth of portfolio across categories and price points, right to win in emerging categories, significant expansion in distribution in low penetration states in North and Central and strong push in high growth naturals segment. We estimate 17.7% EBITDA CAGR and 19.6% profit after tax CAGR over FY18‐20. For volume growth, we estimate a 6% rise based on gradual improvement in demand. Near‐term returns will be slow to come after the 50% up move in the last one year, though long‐term outlook remains bright.