HUL Q4 Preview: Volume Growth Likely Tepid, Margins Expected To Be Under Pressure

The brokerage expects broader FMCG revenue trends to stay stable in the fourth quarter, though urban demand continues to be weak, and rural recovery remains slow.

Revenue growth of 2% year-on-year is expected, driven mainly by pricing, with flat volume growth.

Ebitda is expected to mirror revenue growth, though margins will be under pressure due to raw material inflation.

JP Morgan sees a 2% increase in profit after tax, reflecting stable sales but higher input costs.

Jefferies notes that FMCG demand trends in the March quarter remain similar to the quarter before, with no major improvement in urban demand but gradual recovery in rural markets.

Revenue growth of 2% YoY, with volume growth expected to remain flat and 2% growth coming from pricing actions.

Ebitda is forecast to remain flat YoY, with margins facing a 125 bps decline due to raw material inflation.

Net profit is expected to stay flat, with a 6% YoY decline in advertising spends. The brokerage also highlights weaker-than-expected demand in key categories.

Morgan Stanley sees weak urban demand persisting in the sector, which will result in limited volume growth, although pricing in key categories like copra, tea, and palm oil will help.

Revenue growth of 2% YoY is expected, driven by pricing, while volume growth is expected to be flat.

Ebitda growth of 2% is forecasted, and net profit is expected to increase by 5%.

The brokerage warns that raw material inflation continues to pressurise margins, though some cost-saving measures may provide relief.

Bank of America says that FMCG sector trends remain stable but still sees no meaningful recovery, with urban demand remaining weak.

Revenue growth of 2% is expected, with a mix of flat volume growth and 2% growth from pricing increases.

Ebitda is forecast to decline by 125 bps YoY due to inflationary pressures on raw materials, with a 6% decline in ad spends.

PAT is expected to remain flat, signalling limited profitability growth due to cost pressures.

Goldman Sachs sees a continuation of the weak urban demand and flat volume growth in the March quarter, despite pricing-driven revenue growth.

Revenue growth is expected to be 2% YoY, with Ebitda expected to rise by 2.6% and PAT increasing by 4%.

They note that raw material inflation is still a key concern, but cost efficiencies and lower marketing spends should help mitigate margin pressure.

Categories like soaps, nutrition, and tea will face continued headwinds.

Nomura expects urban demand to stay sluggish, but rural recovery is intact, supported by a bumper monsoon crop.

Revenue growth of 1.2% YoY is expected, with Ebitda rising by 0.6% and PAT increasing by 2.2%.

The brokerage notes flat volume growth, citing a slow recovery despite price hikes.

Nomura also highlights that raw material inflation remains a challenge, particularly with high palm oil prices.

UBS expects the FMCG sector to rebound in fiscal 2026, with a recovery in urban demand, especially once inflation moderates.

The brokerage highlights that although urban demand is weak in the March quarter, the outlook for the second half of fiscal 2026 looks much more promising.

Revenue growth of 2% YoY is expected, with flat volume growth and Ebitda growth forecast to stay flat.

PAT is expected to increase by 4%, driven by efficiencies in key categories.

Nuvama notes a gradual recovery in rural demand, while urban markets remain under pressure due to weak wage growth and higher rentals.

Revenue growth is expected to be 2% YoY, with flat volume growth and Ebitda expected to increase by 2%.

The brokerage mentions raw material inflation, particularly in palm oil, as a key risk factor, which continues to pressurise margins.

Despite challenges, sunscreen and ice cream categories are performing well, though not enough to significantly move the needle.

Motilal Oswal expects demand trends to remain stable, with urban demand sluggish while rural markets outperform.

Revenue growth of 3% is expected, driven by low single-digit price hikes across categories like soaps and tea.

Ebitda growth is expected at 2%, with PAT growth of 1%.

The brokerage notes that margins will be pressured by rising input costs, particularly palm oil and other agricultural commodities.