Demand woes, volume-margin trade-off likely to weigh on HUL stock

Hindustan Unilever’s Q3FY24 performance was lacklustre, with both sales and operating profit barely moving from the year-ago period due to price cuts and higher advertising costs. Besides weak demand, the FMCG (fast-moving consumer goods) major is facing increased competitive pressures, particularly from regional players, which, coupled with a slow recovery in rural markets, could put revenues under pressure going forward.

 

Margins are expected to remain range-bound as benefits from falling raw material costs are expected to be neutralised by rising promotional budgets. Given the underwhelming showing and muted near-term outlook, most brokerages have cut their earnings estimates by up to