FMCG major Hindustan Unilever's fourth quarter earnings are expected to be good, especially after parent company's results & commentary on India and Godrej Consumer's soap revenue growth of 9 percent. The stock also hit a record high of Rs 998.75 ahead of results.
Profit is expected to be at Rs 1,107 crore against Rs 1,113.5 crore in same quarter last fiscal. In Q4FY16, the company had an exceptional loss of Rs 51.2 crore.
Revenue during the quarter may increase 5.5 percent year-on-year to Rs 8,145 crore led by 2-3 percent underlying volume growth, according to average of estimates of analysts polled by CNBC-TV18.
Volume growth was negative 4 percent in Q3FY17 and 4 percent in Q4FY16.
Operating profit is seen rising 6 percent to Rs 1,557 crore and margin may expand 10 basis points to 19.1 percent compared with year-ago period.
Factors to watch
Both consumer offtake & wholesale channels recovered after demonetisation.
Higher raw material cost may impact gross margin but that may be offset by price hike. PFAD price (key raw material for soap) increased 30 percent YoY.
Lower advertising spends may limit operating profit margin decline.
Analysts expect 6-7 percent revenue growth in personal care segment (soaps, shampoos, skincare & oral care, cosmetics) that contributes 50 percent to total revenue and 70 percent to EBIT (earnings before interest and tax).
Home care (Surf Excel, Rin, Wheel etc) segment revenue, which contributed 30 percent to total revenue & 20 percent to EBIT, may show 5-6 percent growth in the quarter ended March 2017.
Also watch for acquisition announcement, if any, because media reports suggested that the company and Nestle have evinced interest in buying Havmor Ice Cream that is valued at around Rs 1,000 crore.