Hindustan Unilever will be reporting its March quarter earnings on Thursday and it likely to be a strong quarter for the company.
A CNBC-TV18 poll expects double-digit growth in revenue, net and operating profit, while margin is likely to remain flat compared to the year-ago period.
On the volumes front, the street is anticipating HUL to report volume growth between 5-6 percent year-on-year.
Commentary from the management on demand environment, inflation cool-off, outlook on acquisitions and leadership changes will be the key.
Most business segments of HUL are likely to see growth between high-single-digits to high-teens during the quarter. While Home Care is likely to see growth in the high-teens, food and refreshments is likely to grow in high-single-digits.
Grammage addition, price cuts are likely to aid volume growth in the soaps business.
During the quarter, HUL mentioned that the royalty fee it pays to parent Unilever Plc will increase by 80 basis points in a staggered manner over the next three years. Of this, 45 basis points has increased since February this year.
Some experts believe extra royalty payment means shareholders will be left will lower cash, and this might be unfair to minority shareholders.
Amisha Vora, CMD, Prabhudas Lilladher, told CNBC-TV18 that, “As for FY24, as their part of the hike becomes effective, we estimate that it will have an impact of about 0.52 basis points (bps) on the margin. And for FY25, as the full impact of this hike in royalty comes, overall, it will be 0.70-0.72 bps impact on the margin.”
The potential 150-180 basis points improvement in gross margin is likely to be partly utilised in ramping up advertising and promotion spends.
Shares of Hindustan Unilever are down 9 percent from their 52-week high. The stock is down 2.2 percent so far this year. At current prices, the stock is trading at 51 times financial year 2024 earnings.