HUL shares gain on BPC segment split, key management portfolio rejig

In the past one month, the stock of HUL has gained over 3 percent as against 4 percent rise in the benchmark Sensex

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Shares of Hindustan Unilever (HUL) gained 1.6 percent to Rs 2,605 per share on December 4 after the FMCG giant decided to split its beauty and personal care (BPC) segment into two in a bid to fight direct-to-consumer and digital-first brands. The S&P BSE Sensex was up 821 points or 1.2 percent to 68,302 levels, as of 9:20am.

In the past month, the HUL stock has gained over 3 percent as against a 4 percent rise in the benchmark Sensex.

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In an exchange filing dated December 1, HUL said that their BPC segment reported a topline of Rs 21,831 crore in FY23 (23 percent of total revenue) and will be segregated into beauty & well-being (B&W) and personal care (PC) segments, with two new division heads to oversee operations.

For the B&W divison, Haram Dhillon would lead, whereas Kartik Chandrasekhar would front the PC business of HUL. Madhusudhan Rao - the executive director of both B&W and PC division said that he had decided to retire the company effectively by April 1, 2024.

Apart from this, the FMCG conglomerate has also appointed a Chief Digital Officer - Arun Neelakantan to drive digital transformation and growth within the company.

ALSO READ: FMCG giants ramp up ad budgets to drive volume growth and fight competition

Former revenue secretary Tarun Bajaj was also appointed as an independent director at HUL.

“Beauty and personal care continues to be a source of value creation for us. However, the business model, innovation rhythm, and competitive landscape for both, B&W and PC, are diverging. The transition will allow us to bring more focus, and leverage our strong portfolio in both businesses,” CEO and managing director Rohit Jawa said

In the September-ended quarter, HUL reported net profit of 4 percent year-on-year (YoY), while total revenue from operations increased by 3.6 percent YoY.

HUL's volume growth of 2 percent in Q2FY24, however, was a further step down versus earlier levels. Analysts, thereby, remained cautious over volume growth given the reversal of inflation and expectation of tailwinds from a good festive season.

"We expect HUL’s stock to be under some pressure on the back of the weak September quarter report and absence of clear volume-trigger at this juncture," analysts at JM Financial had said in a post-result review note.

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