Hindustan Lever (HLL) is expected to post a four per cent y-o-y growth in net profit for the quarter to December 2003. KR Choksey Shares & Securities VP Jigar Shah estimates the bottomline to be around Rs 484 crore this quarter as compared to Rs 466 crore last time.
Topline for this quarter is expected to be Rs 2698.6 crore, a 2.4 per cent growth over Rs 2634.5 crore of previous December quarter. Net profit for the entire year is expected to be Rs 1,760 crore, while the topline could be Rs 10,126 crore. According to Mr Shah, this translates into an EPS of Rs 8, which is almost same as Rs 7.92 of last year.
After a lull of many quarters, the elusive topline growth is also expected to come to HLL this time. The economy is doing well and this is considered to be the right time for HLL to deliver. SBI Mutual Fund fund manager Sandip Sabharwal observed that other FMCG players like Dabur, who are also active in the rural segment, have shown good sales numbers in December quarter.
However, there are contrary viewpoints. Some analysts do not expect any significant recovery in HLL’s sales and profits in this quarter. The pressure on the detergent segment is likely to offset the gains in other segments. At the same time, it is believed that the worst phase of reconciling FMCG price-value-brand dynamics is over and HLL has successfully adapted to the changed paradigm. With good farm incomes, the company is likely to witness further market penetration.
The stock of HLL on BSE has gone up by around 6.8 per cent over the past 15 days to Rs 202.95 as on February 13, 2004. The stock had reached its 52-week high of Rs 218 somewhere in late December 2003. The power brands are also expected to show better sales performance and the core portfolio constituting soaps and shampoos should gain good market share. Mr Shah feels that the company’s tea business as well as exports are likely to have done well in December quarter.
The company is said to have performed well on the cost control and efficiency fronts during the past 2-3 years and no big surprises are expected on the expenditure side. For the moment all eyes and ears are focused on the topline