Multiple margin levers ahead for Hindustan Unilever

Volume growth and profitability exceed Street expectations in Q4

Improvement in operating profit margin was the surprise element in Hindustan Unilever's (HUL's) March quarter (Q4) results. Most analysts had muted expectations, given the rise in prices of key inputs such as palm fatty acids and elevated advertising spending, leading to benign margin estimates. In contrast, HUL's margin inched up 98 basis points (bps) over a year to 20.4 per cent. Like its peers, HUL toned down its ad spends in Q4 but this is unlikely to sustain, believe analysts. Continued high competitive intensity will mean the company will have to invest in advertising and promotional activities to protect and