HUL anticipates revenue growth ahead of Q2FY24 results

Hindustan Unilever (LON:) Limited (HUL) is set to release its second-quarter financial results for the fiscal year 2024 on Thursday, October 19. Analysts project a 3% year-on-year (YoY) increase in revenue from Rs 14,751 crore in Q2FY23 to Rs 15,224 crore in Q2FY24.

The FMCG titan also forecasts a 6% YoY rise in EBITDA, from Rs 3,377 crore in Q2FY23 to an estimated Rs 3,589 crore in Q2FY24. This is consistent with HUL’s historical performance, as it’s known for its impressive gross profit margins, a trait highlighted in InvestingPro Tips. However, net profit is predicted to remain relatively stable at Rs 2,603 crore, compared to Rs 2,616 crore reported in the same quarter of the previous fiscal year.

HUL expects modest volume growth of about 3%, while pricing growth is anticipated to remain flat. The company attributes these projections to reduced costs for soaps, shampoos, laundry products, and raw materials. As a result of these cost reductions, gross margins are expected to improve from last year’s 22.9% to a projected 23.6%.

The FMCG sector, India’s fourth-largest industry, is experiencing robust growth driven by factors such as increased disposable income, a rising youth population, and heightened brand awareness. A report by the India Brand Equity Foundation reveals that household and personal care products account for half of FMCG sales in India. This is no surprise, considering HUL’s prominence as a player in the Personal Care Products industry, as noted in InvestingPro Tips.

Urban areas contribute approximately 65% of the total FMCG revenue. Yet, rural spending on FMCG products has seen a recent surge. Semi-urban and rural segments are expanding rapidly and now account for half of all rural spending on consumer goods.

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