Hindustan Unilever Ltd. is expected to boost its margins in the second half of the fiscal as consumer goods companies benefit from improving consumption and cooling prices, according to top brokerages.
Earnings growth for the maker Dove shampoo is set to accelerate in six months through March as inflation headwinds subside, and demand environment improves, Jefferies said in a Sept. 22 report note. It forecasts 12% annual growth in revenue with 60-basis-point improvement in operating margin.
HUL has maintained pricing in portfolio, which would benefit from lower palm oil prices (skin cleaning, hair care), Jefferies said in Sept. 22 report. However, further product price hikes have been implanted in categories such as laundry, household care, skin care, and foods, it said.
According to Nomura’s Sept. 22 report, HUL will benefit from demand uncoiling in out-of-home categories as the economy has largely opened up.
HUL’s enhanced digital capabilities, nano-factories and Shikhar app will help it in taking correct steps, launch niche products and leverage data analytics-based consumer insights and geo-targeted distribution, it said. That, it said, will aid in succeeding in the emerging segment of direct-to-consumer and digital-first products.
HUL shares were trading 0.18% lower on Friday at 12:38 p.m. compared with 1.12% decline in the benchmark Nifty 50. Trading volume is nearly twice the 30-day average. The stock is up more than 4% for the week, in line with the rise in the FMCG Index.
Consumer-facing companies, expecting bumper sales in the forthcoming festive season, have ramped up supply chains and marketing efforts.