HUL net may rise 7% on improving demand, but margins face pressure
Volume growth is expected to be in high single digits on the back of healthy demand and low-base effect.
Speedy vaccinations and a pickup in economic activities have helped buttress consumer demand, paced by purchases in rural areas. This is likely to help HUL improve the performance of its home and personal care segments, which were adversely affected due to lockdowns. Wellness-driven consumption is likely to continue to boost revenues of the company’s nutrition portfolio acquired from GlaxoSmithKline.
Operating margins are likely to contract to around 23% – under pressure from high raw material prices like palm oil, tea, and crude oil derivatives. Raw material costs make up about half the company’s revenue.
Management commentary on the intensity of input cost inflation, impact of festive demand on consumption, outlook on rural demand, strategy on product pricing and traction of ecommerce sales would be important monitorables for the Street.
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.