HUL, ITC may not surprise Street in Q2

Hindustan Unilever (HUL) and ITC - two of India's biggest consumer goods companies - will declare their September quarter numbers on October 26. Analysts do not expect major surprises coming from the two firms given that the Rs 3.2-lakh crore fast-moving consumer goods (FMCG) market is seeing a slowdown.

A clear indicator of this was given by HUL's parent Unilever a fortnight ago when it said market conditions had softened in the country and that the second-quarter results would mirror that possibility. "Volume (growth) in skin cleansing (in India) has suffered from price increases. Indian markets remain subdued and under pressure," said Andrew Stephen, investor relations head at Unilever.

Consensus estimates are that HUL will report an underlying volume growth of 2-4 per cent, in line with what it had registered in the past two quarters. The view about ITC, India's largest cigarette maker, is no different. The company is expected to report a modest volume growth in the tobacco business, which gives the firm 40 per cent of its revenue and 80 per cent of its pre-tax profit.

"On a base of 16 per cent decline, we expect volume growth of three per cent year-on-year (y-o-y) in Q2FY17 in cigarettes," Edelweiss analysts Abneesh Roy and Tanmay Sharma said in a note recently. The first quarter of the financial year saw ITC deliver a three per cent volume growth on a base of 17 per cent decline in cigarette volumes. On HUL, Roy and Sharma said the company's revenue growth in the September quarter would be Rs 7,921 crore, up 2.5 per cent y-o-y.