Hindustan Unilever Limited (HUL), India’s largest fast-moving consumer goods company, is set to announce its financial results for the July-September quarter on Thursday. This will be the first quarter under new CEO Priya Nair, who was appointed on August 1. The company has recently implemented price cuts across several popular product categories in response to GST cuts, which came into effect on September 22. The GST rates for soaps, shampoos, toothpaste, and other consumer products were reduced from 18% to 5%.
The price cuts, ranging from 10% to 15%, are expected to benefit 40% of HUL’s portfolio. However, the company has faced supply chain disruptions and a short-term impact on sales due to the transition. Distributors and retailers have paused new orders to clear existing inventory, and consumers have delayed purchases in anticipation of lower prices. The impact is expected to continue into October, but analysts predict a recovery starting in November.
A Bloomberg poll of 15 analysts has estimated HUL’s consolidated revenue at Rs16,024 crore and a profit after tax of Rs2568.6 crore. Another poll of 21 analysts has pegged HUL’s standalone revenue at Rs15,938 crore, with 18 analysts expecting a profit of Rs2511.5 crore. The company’s management commentary on Thursday will provide more details on the impact of the GST transition and the price changes on consumer demand.
The new CEO, Priya Nair, is expected to provide insight into the company’s strategy and handling of the GST transition. Analysts have noted that HUL has shown aggression and speed under Nair’s leadership, with the company being among the first to come out with ads relaying new prices under the revised GST regime. However, the benefit of lower input prices is expected to be offset by higher sales promotions, which will impact profitability metrics.
Nuvama Institutional Equities analyst Abneesh Roy expects HUL to report a 1% year-on-year increase in consolidated revenue, with underlying consolidated volumes remaining flat year-on-year. The company’s EBITDA margins are expected to contract by 190bps on a year-on-year basis to 22%. Overall, the quarter’s results will provide insight into HUL’s performance under new leadership and its ability to navigate the challenges posed by the GST transition.