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HUL Q4 net may slip; volume likely to grow, margins seen stable

No firework is expected from Hindustan Unilever ‘s (HUL) January-March quarter result but volume is likely to grow riding on price deflation. Margins are expected to remain stable on benign input cost environment and cost control.

According to a CNBC-TV18 poll, the FMCG major is seen reporting net profit at Rs 996 crore in Q4FY16, marginally down by 2 percent from Rs 1018 crore in corresponding quarter last fiscal. During the period, revenue may rise 4 percent at Rs 7990 crore against Rs 7675 crore on annual basis.

In Q4, EBITDA is seen up 6 percent at Rs 1399 crore versus Rs 1317 crore while EBITDA margin may stand at 17.5 percent versus 17.2 percent year-on-year.

Analysts polled by CNBC-TV18 feel HUL may see volume growth of 5-6 percent while price deflation and price promotions may lead to adverse impact of 1 percent. Price deflation in soaps may offset traction in personal products.

Lower input costs may support gross margin expansion by 150-200 basis points (bps) year-on-year. Prudent cost control may further aide margins. Higher advertising and promotions (A&P) spends and streamlining of channel spends may partially offset gross margins. Ad-spends are expected to remain buoyant amid intense competition.

Watch for
#Pricing of soaps & detergents in the quarter on back of palm oil prices
#Performance in oral care where competition is intensifying
#Plans on personal care segment which commands nearly half of EBIT
#Overall demand environment – rural and urban
#Integration of smaller acquisitions like Indulekha