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Moneycontrol Pro Panorama | Rural demand fails to shape up. Will the Budget step up?

In today’s edition of Moneycontrol Pro Panorama: HUL flexes its muscles, the weekly tactical, Asian Paints margin stays the course, Budget Chart of the Day, the Immunity Tracker and more

January 21, 2022 / 04:03 PM IST
Representative Image (Source: Reuters)

Representative Image (Source: Reuters)


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The fiscal third quarter earnings of Hindustan Unilever are further confirmation of the thesis of weak private consumption in India.

Although the consumer products company reported robust headline numbers, volumes declined in rural markets and were little changed in urban markets.

The moderation in rural markets was the highlight of HUL’s earnings call and its Chairman and Managing Director Sanjiv Mehta has urged the government to put more cash in the hands of rural consumers.

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Rural demand has been moderating (slower growth on a two-year CAGR basis) due to low farm wage growth versus higher farm input cost inflation, said Nomura in a note to clients yesterday.

As we pointed out earlier this month, demand for work under the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) is still much higher than the pre-pandemic times. This is a sign that there are not enough job opportunities out there, much less high-paying jobs.

In the earnings call, Mehta suggested that the government could even look at increasing the outlay on MNREGA which provides guaranteed employment for 100 days.

Things are not expected to improve in a hurry as well. According to the advance GDP estimates for the current financial year, growth in private consumption is expected to be only 1.8 percent in the second half.

All eyes are now on the Budget announcements. A step–up in government infrastructure building will have a rub-off effect on the construction sector, one of the largest sources of employment.

Meanwhile, what should investors in HUL do? Our research team has argued that the moderation in demand and higher commodity prices will impact the company’s performance in the short term. In a separate opinion piece, we also look at whether HUL has made a mistake by flexing its pricing power to protect margins while demand is low.

Investing insights from our research team

Asian Paints Q3: Margin recovery on track

Weekly Tactical Pick - Aditya Birla Sun Life AMC

Bajaj Auto drives in with a reasonable valuation

Shakti Pumps: In a recovery mode, growth likely to resume

Saregama: Dec quarter performance is music to the ears, but positives are priced in

Rallis India: Will FY23 be a better year for the company?

What else are we reading?

Budget Chart of the Day | Will Budget crack the whip on corporate tax exemption regime? 

Herd Immunity Tracker: Omicron wave has apparently 'peaked'

Why cryptocurrencies are facing multiple headwinds

Budget gives a chance for urgent course correction on healthcare

Algo Rhythm| The 1st stage of Algo Trading - High level requirement document

Game on for Microsoft as it acquires Activision Blizzard in mega deal

Newly minted edtech unicorn LEAD has its task cut out for it

The EV revolution needs an energy surge  (republished from the FT)

And in Personal Finance

Personal Finance | Travails of IPO investing

 Technical Picks: Polycab, CDSL, PowerGrid and Axis Bank (These are published every trading day before markets open and can be read on the app)

Ravi Krishnan

Moneycontrol Pro



Download your money calendar for 2022-23 here and keep your dates with your moneybox, investments, taxes

Ravi Krishnan is deputy executive editor at Moneycontrol
first published: Jan 21, 2022 04:03 pm
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