Hindustan Unilever may see a subdued quarter even as shares near 52-week high | Earnings Preview

FMCG major Hindustan Unilever will report its September quarter earnings on Friday, October 21. The street is anticipating a subdued quarter for the company as volumes may be impacted by price hikes and weak rural demand.

A CNBC-TV18 poll expects revenue to grow in the mid-teens while EBITDA may witness a high-single-digit jump compared to last year. The company may face margin pressure due to higher input costs.

However, recent reports suggest that companies like HUL and Godrej Consumer Products have cut prices of some soap brands by up to 15 percent as costs of raw materials like Palm Oil have come down.

The street is anticipating the company to report volume growth of 4-5 percent on a base of 4 percent last year. Commentary on rural demand would be key as peers like Marico, Godrej Consumer, and Dabur have spoken about weak demand sentiments as part of their quarterly business updates.

Godrej Consumer: Rural markets witnessed slower growth compared to urban.

Marico: Weak sentiments in rural markets has resulted in downtrading.

Dabur: Rural markets faced some liquidity pressure.

Among other factors that need to be watched include growth in the Home Care business, which is likely to be aided by price hikes. The street anticipates this business to grow 25-30 percent during the September quarter. Growth in the Beauty and Personal care business is likely to be in the low-to-mid-teens while Food & Refreshments may grow in the low-to-mid-sigle digits.

Some reports have also indicated that the company is in talks to acquire majority stakes in the direct-to-consumer brands, Wellbeing Nutrition and Conscious Food, to strengthen the in-house product category.

Shares of Hindustan Unilever have gained 10 percent this year and are trading 5 percent away from their recent 52-week high of Rs 2,734. The stock trades at 54 times its forward earnings for next year.