HUL Shares Slip Over 4% After Management Cuts Margin Guidance

Shares of Hindustan Unilever extended losses and slipped over 4% on the National Stock Exchange after the company’s management lowered the guidance for margin to 22-23% from 23-24%.  Earlier today, the stock surged as much as 2.6% after the company boasted a 2% growth in volumes for the Marc quarter, beating the Street’s expectations.

Sharing near to medium term outlook, HUL’s management cut the EBITDA estimates to 22-23% , according to the company’s investor presentation. The FMCG market is witnessing subdued demand conditions, while urban demand continues to moderate, the heavyweight FMCG company said. Investors reassessed their positions despite the company’s management reiterated the company’s focus on volume-led growth. The company is expected to clock better performance in the first half of the current financial year compared to the latter half of FY25.

If commodities remain where they are, price growth is expected to be in the low-single digit range. However, gross margin is expected to moderate as the company continues to deliver the right price-value proposition, the company’s management said. 

Although the company’s quarterly earnings turned out to be in line with the expectations, the margin guidance spooked the investors. The FMCG major posted a 3% growth in its consolidated revenue for the quarter, while reporting a near 4% on year fall in net profit for the period.

Increased input costs, purchases of stock-in trade, along with an exceptional loss of Rs 138 crore weighed on the company’s earnings. Contrary to this, the company booked a one-time gain of Rs 78 crore in the year-ago quarter. The company’s eBITDA margin also contracted 10 basis points on year to 23.4%.

Barring the foods segment, all the other segment of the FMCG company reported higher revenue compared to the base quarter.

For the full financial year, HUL’s consolidated revenue rose 2% and its profit grew nearly 4%. Currently, HUL shares are just 9% over the 52-week low level, which they touched in March this year.

Earlier today, another FMCG firm Tata Consumer Products also tanked over 4.5%, despite the company reported a 59% spike in its consolidated net profit. However, shares of Tata Consumer Products have now given up the crimson hue and are now trading 0.7% higher on the NSE.