Hindustan Unilever Ltd.’s second-quarter profit rose, beating estimates, but inflationary pressure continued to weigh on volumes and margins.
The net material inflation during the July-September period was 22%, higher than 20% in the June quarter, as prices of most commodities remain elevated, Mehta told BQ Prime in a post-earnings call.
The weakening of the rupee is also adding to inflation.
Crude oil prices are up 35% YoY, soda ash prices are up 55%, skimmed milk powder are up 30% while premium variety tea prices are 15% higher over the previous year, the company said.
Only palm oil prices have fallen 20% year-on-year. "We expect December quarter NMI to be relatively lower given the palm oil prices have softened, thus aiding margins," Mehta said.
Mehta said he is "cautiously optimistic" on the near-term growth amid falling input costs, higher crop realisation aiding rural income and fiscal measures taken by the government.
Segment-wise, revenue from home care rose 34%, while beauty and personal care as well as food and refreshment grew at 11% and 4%, respectively.
"In-quarter performance of food was muted as price cuts in tea impacted overall value growth. Volumes, however, grew in mid-single digit," Mehta said.
Peers including ITC Ltd., Nestle India Ltd. and Tata Consumer Products Ltd., too, saw a steady jump in revenues aided by price hikes and demand recovery but flagged pressure on operating margins.
However, the companies feel that the input cost pressure has bottomed out and margins should improve in the second half of the current fiscal.
HUL has also declared an interim dividend of ₹17 per equity share for the financial year ending March 31, 2023.
Shares of HUL closed 2.1% higher on Friday as against a flat benchmark Nifty 50. The results were declared after market hours.
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