Double digit growth predicted for HUL’s ice cream business? All eyes on the premiumisation strategy
Hindustan Unilever Ltd (HUL) is poised to maintain strong growth in its ice cream business, with forecasts suggesting double-digit expansion. However, operating profit is expected to remain strong at current levels, while price growth is likely to be in the low single digits. Earnings per share (EPS) is expected to grow in double digits, driven by a strategic emphasis on its premium portfolio.
Capital Markets Day 2024: Key areas of focus
HUL is hosting Capital Markets Day 2024 today, with an analyst meeting scheduled from 11 AM to 6 PM. Management comments will be closely monitored to improve:
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Urban and rural demand trends: Details of the timeline for recovering urban demand will be important.
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Holiday season performance: The growth trajectory of the premium segment and its future outlook will be explored.
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Unilever’s strategy in India: Analysts are keen to hear about the parent company’s “double down” approach and its implications for HUL.
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Premiumization plans: Updates on the company’s focus on premium products and its market impact are expected.
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Condiment business expansion: Investors are waiting for clarity on growth plans in this segment.
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Changes in soap making: Market response to recent adjustments to the manufacture of Lifebuoy and Lux will be assessed.
Margins and cost pressures
In the near term, operating margins will be impacted by rising costs of chemo (chemicals), a key input. Management’s view on mitigating these pressures is awaited.
Ice cream demerger and price opening
HUL’s plans for its ice cream business, including potential divestment and value unlock opportunities, will be another area of interest for stakeholders.
The company’s ability to navigate cost pressures while driving premiumisation-driven growth remains a key driver of future performance. Analysts will also monitor the management’s stance on balancing the growth of rural and urban markets amid improving economic conditions.
