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Jan-Mar earnings of consumer goods major Hindustan Unilever will set the tone for the shares of all companies in the sector next week, though the broad trend is seen positive following the forecast of a normal monsoon this year. India's largest fast-moving consumer goods company Hindustan Unilever will announce its Jan-Mar results on Monday.
HUL is expected to post a profit of 6.86 bln rupees, a 12% increase on year for the Jan-Mar quarter and 5% increase in sales volumes that will result in a 12% increase in sales to 56.6 bln rupees. The results of HUL are going to determine what course FMCG stocks will take, while we expect a 5% volume growth in lever(HUL), a lower than expected volume growth will hurt sentiment across the FMCG sector.
Post market hours yesterday, the India Meteorological Department predicted a normal monsoon. It said that this year the southwest monsoons are likely to
be normal at 98% of the long period average. This announcement is set to bring some cheer to FMCG stocks as a good monsoon usually means lower food prices and higher disposable income.
HUL gets almost 45% of its sales from rural areas, a company like Dabur gets about 50% of its sales from rural areas, the prediction of a normal monsoon is a definite positive for FMCG companies. In a scenario where there is a clear slowdown in urban regions and high inflation is eating into disposable incomes, a
normal monsoon will give much needed traction to FMCG volumes.
