HUL's Q2 Results Disappoint Amid Slowing Urban Demand
- Hindustan Unilever reported a 3.9% drop in standalone net profit to ₹2,612 crore for the September quarter.
- Analysts expressed concerns about slowing urban demand impacting HUL's growth, with volume growth falling short of estimates.
- Despite the challenges, market shares remain strong, and some brokerages maintain positive ratings on the stock.
In India, Hindustan Unilever's (HUL) financial results for the second quarter of 2024 were disappointing, revealing a 3.9% decrease in standalone net profit to ₹2,612 crore compared to the previous year. Revenue from operations increased by just 1.5% to ₹15,508 crore, reflecting the challenging market conditions. The company is also planning to separate its ice cream business by the end of the year, which signals a strategic approach to enhance operational focus. Analysts have highlighted a consistent slowdown in urban demand as a major factor impacting HUL's growth. Specifically, the company’s volume growth fell short of expected benchmarks, achieving only 3% when 4% was anticipated. This downturn has resulted in reduced earnings per share estimates for the fiscal years 2025 to 2026, reflecting ongoing inflationary pressures in key segments such as tea and palm oil. Brokerage firms have provided mixed recommendations in light of these results. While JPMorgan maintains an 'overweight' rating but lowered its target price, Morgan Stanley has issued an 'underweight' rating, pointing to persistent challenges within the personal care and food segments. Conversely, Jefferies and HDFC have expressed optimism about potential revenue growth in the upcoming fiscal years, suggesting that the worst period may be behind HUL. Overall, HUL's recent performance illustrates the complex balance of market demand, inflation, and strategic adaptations required for growth within the fast-moving consumer goods sector.