Hindustan Unilever Hits Record High On Margin Boost Expectations
Lower palm oil prices will aid HUL’s margins, expect analysts.
Hindustan Unilever Ltd. stock hit a life-time high in trade on Wednesday, as investors expect operating margins to improve in the first three months of this year.
The country's largest consumer goods company is yet to come out with its fourth quarter earnings, but peer Godrej Consumer Products Ltd. stock hit an life-time high on Tuesday, after reporting a 18.5 percent growth in its bottomline in the quarter gone by.
Lower commodity prices will also aid margins, said market analysts tracking the sector. Crude palm oil derivatives have dipped 9 percent and with it being a key raw material for soap and detergents, HUL's personal care segment stands to gain the most. The segment contributes nearly half of the company's revenue and over two-third of the company's operating gains.
HUL has partly gained because Godrej Consumer Products’ earnings have given markets confidence. Crude oil has now fallen below $50 a barrel and with cash coming back to the system, the impact of demonetisation is waning.G Chokkalingam, Founder and Managing Director, Equinomics Research & Advisory
The recent comments made by the Indian Meteorological Department chief KJ Ramesh about improving prospects of adequate rainfall for the second year in a row, has also aided sentiments. A normal rainfall helps check raw material prices in check and usually leads to an increase in consumption.
