Jul 19, 2022
By: Rounak JainOne of the concerns in the FMCG sector has been flat volumes, and that could be changing for HUL finally, say analysts. The market will keenly watch out for commentary on consumer demand trends and volume-led growth. So far most of the growth has been driven by value and price hikes.
Credit: HUL
Some analysts expect a pick up in discretionary items like cosmetics and skin care.
Credit: HUL
ICICI Securities also said that strong, disruption-free demand for ice creams during the summer after two years could have also aided HUL’s volumes.
Credit: HUL
For context, India was under a lockdown in the summers of 2020 and 2021 – summer falls during the Q1 of the financial year.
Credit: BCCL
Due to the volume growth, analysts expect double-digit growth in sales and profit, with profit in the range of ₹2,200 crore.
Credit: HUL
Analysts at Kotak Institutional Equities expect revenue to surge 14.5 percent year-on-year to ₹13,643.5 crore.
Credit: HUL
According to Edelweiss, HUL leads in 9 out of every 10 portfolio categories, which gives it “ample room to premiumize”, essentially meaning HUL can raise prices easily.
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HUL has already raised prices of its products to offset inflationary pressures, and analysts expect this to give its revenues a boost along with volume growth.
Credit: HUL
However, despite the strong growth expected in sales and profit, analysts state the elevated prices of raw materials like palm oil and crude derivatives could keep HUL’s margins stressed.
Credit: HUL