HUL gains over 2% as Q3 volume growth beats Street expectations; ITC flat

Hindustan Unilever (HUL) gained around 2 per cent on Saturday, a day after the company reported a volume growth of 5 per cent in the third quarter of the current fiscal (Q3FY20), ahead of analysts' estimates of 3-4 per cent.

At 09:36 am, the stock was trading over 2 per cent higher at Rs 2,082.70 apiece on the BSE. It hit a high of Rs 2,088.35 till the time of writing of this report. 

HUL's profit before tax (PBT) grew 14.3 per cent to Rs 2,229 crore, while its net profit grew nearly 12 per cent Rs 1,616 crore year-on-year (YoY).

Revenue (which includes net sales plus other operating income) rose 2.6 per cent to Rs 9,808 crore in the December quarter. Analysts had estimated Rs 10,034 crore, according to Bloomberg.

Earnings before interest tax, depreciation and amortisation (Ebitda) rose 19 per cent to Rs 2,445 crore — higher than analysts’ estimates of Rs 2,241 crore. Ebitda margin expanded to 24.9 per cent from 21.4 per cent, higher than the consensus projection of 22.3 per cent.

"This quarter witnessed an overall challenging market environment, mainly reflecting a sharp slowdown in rural and discretionary spends. HUL has delivered a resilient performance which is reflective of its strength of our brands, consistency in our strategy, and execution prowesss. Our continued focus on innovation and market development has helped sustain underlying volume growth at a steady 5 per cent. We have also delivered a healthy margin improvement," said Sanjiv Mehta, Chairman and Managing Director at HUL. 

“The demand outlook remains challenging in the short-term,” Mehta said, adding that he saw medium-to-long-term prospects for the domestic FMCG market improving. “I remain hopeful that policy measures will spur demand and drive consumption,” he said, as attention shifts to the Union Budget to be announced on Saturday.

Other FMCG major ITC was trading flat with positive bias. The company on Friday reported a 29.03 per cent increase in consolidated net profit at Rs 4,047.87 crore for the third quarter ended December 2019.

It had posted a net profit of Rs 3,136.95 crore in October-December quarter of the previous fiscal. According to the company, the macro-economic environment continues to be adversely impacted as reflected in deceleration in GDP growth and persistent weakness in consumption demand and investments.

"Delayed arrival of the Kharif crop due to spatial variations in rainfall, especially close to the harvest season, commodity price inflation together with disruptions in certain parts of the country exacerbated the already challenging operating environment during the quarter," ITC said.