HUL rallies as net doubles to Rs 1330 cr on property sales

Hindustan Unilever rose as much as 4.4 percent on Tuesday after India’s largest consumer goods maker said April-June net profit doubled from a year earlier after a one-time gain from sale of properties, handily beating estimates.

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Net profit at Hindustan Unilever surged to Rs1330 crore in the first fiscal quarter of the year from Rs 630 crore a year earlier, well above the consensus estimates for a Rs 694 crore profit. Results were out after the market close on Monday.

Net sales for the quarter rose 14 percent to Rs 6250 crore, with 9 percent underlying volume growth.

Morgan Stanley said the results reflected “strong” volume growth and “even stronger pricing”.

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On a comparable basis it is slightly better than expected…the volume growth has been strong and that is one encouraging number to take with us into a very uncertain time ahead ," said Naveen Trivedi, an analyst with PINC Research.

Indian consumer goods makers face a difficult choice between raising prices and retaining market share as inflation in home, personal care and food segments, as well as weak consumer sentiment pinch margins and price increases hurt volume growth.

HUL’s operating margins in the quarter rose 180 basis points from a year ago, with its operating profit rising 30 percent.

Sales at the home and personal care segment grew 21 percent, while its foods business grew 11 percent.

“Q1 results underscore our view that large consumer companies in India are gaining volume market share at the cost of regional players,” Morgan Stanley analysts wrote in a note.

However, India’s largest consumer goods maker, warned of challenges from a deficient monsoon, persistent inflation and currency volatility when it reported a doubling of quarterly profit on Monday.

“We have to watch out for the impact of the monsoon and wait for this quarter to play out,” R. Sridhar, chief financial officer said.

Deficient monsoons hurt rural purchasing power, as India is largely dependent on its annual monsoon rains for crop growth.

Reuters