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HUL Posts 3% Rise in Q2 Net Profit – Top Indian Market Updates

Here are some of the major updates that could move the markets tomorrow:

HUL Q2 results: Net profit rises to ₹2,717 crore

Hindustan Unilever Ltd (HUL) reported a 3.85% YoY rise in net profit to ₹2,717 crore for the quarter ended September 2023 (Q2 FY24). Net profit stood at ₹2,616 crore in Q2 last year. Its revenue from operations rose 3.53% YoY to ₹15,027 crore during the same period. EBITDA stood at ₹3,694 crore, up 9% YoY. The company’s board also declared a dividend of ₹18 per equity share.

Read more here.

NCLT approves Tata Steel Long Products’ amalgamation with Tata Steel

The National Company Law Tribunal (NCLT) approved the amalgamation of Tata Steel Long Products Ltd with Tata Steel Ltd. Tata Steel is to merge Tata Steel Long Products and six other subsidiaries with itself. The subsidiaries to be merged with Tata Steel are Tata Steel Long Products, The Tinplate Company of India, Tata Metaliks, TRF, Indian Steel & Wire Products, Tata Steel Mining and S&T Mining Company.

Read more here.

Jindal Stainless Q2 Results: Net profit rises 75% YoY to ₹609 crore

Jindal Stainless Ltd reported a 74.5% YoY rise in net profit to ₹609.4 crore for the quarter ended September 2023 (Q2 FY24). Its total revenue rose 13.6% YoY to ₹9,720.4 crore during the same period. EBITDA stood at ₹1,069 crore, up 54% YoY. The company’s board has declared a dividend of ₹1 per equity share, with October 28, 2023 as the record date.

Read more here.

Dr Reddy’s Labs gets regulatory approval to study weight loss drug

Dr Reddy’s Laboratoris Ltd has received the Indian drug regulator’s approval to study the safety and efficacy of Semaglutide, a weight loss drug. The pharma company will conduct a bioequivalence study to establish the safety and efficacy of the drug on the Indian population. The company will launch the drug in a year if the bioequivalence studies meet expectations.

Read more here.

PVR Inox Q2 Results: Net profit at ₹166 crore

PVR Inox reported a net profit of ₹166 crore for the quarter ended September 2023 (Q2 FY24). The company posted a net loss of ₹71 crore in Q2 last year. Its revenue from operations rose 191% YoY to ₹2,000 crore during the same period. EBITDA stood at ₹706 crore, up 358% YoY. 

Read more here.

USFDA conducts pre-approval inspection at Indoco Remedies’ Goa facility

Indoco Remedies Ltd’s solid oral formulation facility in Goa received four observations from the US Food & Drug Administration (USFDA) after a Pre-Approval Inspection (PAI). The inspection took place from October 12-18, 2023, and was focused on two drug product applications (ANDAs) submitted from this facility. The observations signify areas where the facility may need improvements to align with regulatory standards.

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UltraTech Cement Q2 Results: Profit rises 69% YoY to ₹1,281 crore

UltraTech Cement reported a 69% YoY rise in net profit to ₹1,281 crore for the quarter ended September 2023 (Q2 FY24). Net profit stood at ₹756 crore in Q2 last year. Its revenue from operations rose 15% YoY to ₹16,012 crore during the same period. EBITDA stood at ₹2,718 crore, up 35% YoY. 

Read more here.

KFin Tech partners with LIC Pension Fund for investment management solution 

KFin Technologies Ltd signed a high-value multi-year investment management solution (IMS) contract with LIC Pension Fund Ltd (LICPFL). The company will design, create and administer the investment management solution for enhanced customer service, security and compliance. The company has not disclosed the contract tenure and value.

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Dabur India’s US subsidiaries sued over alleged cancer causing product

Dabur India Ltd’s three US subsidiaries are being sued over an alleged cancer causing product. The cases are in the early stages of legal discovery and revolve around allegations that a hair-relaxer product contains chemicals that may pose risks of ovarian cancer, uterine cancer, and various other health issues. These cases have been filed in both federal and state courts in the US and Canada.

Read more here.

Nestle India board approves stock split in 1:10 ratio

Nestle India’s board approved a 1:10 stock split for the first time in India. This means each share that an investor holds will be subdivided into 10 shares. The split will divide each fully paid-up equity share with a face value of ₹10 into 10 equity shares with a face value of ₹1. The record date for the split will be announced later.

Read more here.

Granules India gets USFDA nod for heartburn treatment drug

Granules India has received approval from the US Food & Drug Administration (USFDA_ for Esomeprazole Magnesium capsules. The drug is used to treat heartburn and other symptoms associated with gastroesophageal reflux disease. According to the IQVIA data for 12 months ended July 2023, the drug had annual sales of nearly $168 million in the US market.

Read more here.

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Editorial

How Has Inflation Impacted The FMCG Sector?

The Russia-Ukrainian crisis, rising fuel prices, and global interest rate hikes have fueled inflation. Many sectors of the worldwide economy are impacted by it. One such is the FMCG or Fast Moving Consumer Good sector.

In a December 2021 issue, we discussed the WPI-CPI divergence and how inflation wasn’t reflecting on retail prices. While manufacturers continued to produce goods, there wasn’t sufficient demand YET among consumers. Businesses had not yet started passing on the burden of inflation to consumers. The FMCG companies cannot sustain any longer and have now decided to hike prices and pass on the responsibility of inflation to consumers. In this piece, we discuss the outlook of the FMCG sector and the impact of inflation on it. 

Effects of Inflation 

Central banks across the globe have started hiking interest rates. Most are following a contractionary monetary policy, meaning they have started taking money out of the economy. If the tapering of liquidity impacts personal income, it could restrict consumers from spending, eventually stalling economic growth and causing a considerable output gap. 

High prices could mean the following for FMCG companies:

  • Lower Profit Margins
  • High Cost of Transportation/Supply Chain
  • Increased Cost of Storing 
  • Reduction In Volumes of Goods Sold 

Where do we see the impact of inflation around us? For the first time since 2007, the price of a matchbox has doubled from Rs 1 to Rs 2. Even the iconic, Maggi Noodles are now dearer by Rs 3 for a pack of Rs 140 gm. India has a long battle to fight against inflation.

How is Dalal Street Reacting To It? 

The NIFTY FMCG, a benchmark index consisting of the top four FMCG Companies,  was fueled by the COVID bull run till September 2021. The index has stalled ever since then, sliding by 12-15% since it hit an all-time high of 40,426. The market has been on a downtrend, and the reason is apparent. It is dimming investor sentiment due to inflationary pressures on the FMCG sector. 

Varun Beverages, Colgate-Palmolive, Proctor & Gamble (PGGH), and ITC have been the top gainers for the quarter, seeing around 4-16% gain in share price in the last three months. Top FMCG Players like Hindustan Unilever, Jubilant Foodworks, Bajaj Consumer Care, and Nestle India lost anywhere between 9-21% in share price in the last three months. 

The Way Ahead 

According to the latest reports, FMCG companies have decided to hike prices by around 10-15%. One can eventually expect the prices to go down with time. With events that folded after the COVID-19 pandemic, inflation was imaginable. 

There is one interesting paradigm that we can see in India’s case. India’s exports are at an all-time high, crossing $400 billion. Even the USD to INR conversion rate is fluctuating at higher levels. This means that we could make more in rupee terms for every commodity that we export. India hasn’t yet started to take advantage of the global shortage of certain commodities. If Indian FMCGs managed to tune the exports to get better realization and higher gross margins, they could use the surplus from exports to adjust domestic prices to improve domestic volumes. However, this remains a possibility until domestic FMCG companies act on it. 

Do you think FMCG stocks are likely to perform better in the coming months? Let us know in the comment section available in the marketfeed app. 

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Market News

Nestle India Q2 results: Net Profit rise by 11%

nestle

FMCG firm, Nestle India, reported an 11.15% year-on-year rise in net profit at Rs 486 crore for the quarter ended June 30. This number was amassed to Rs 437 crore for the same quarter last year. There has been a double-digit rise in net profit even amid the global pandemic, yet the numbers are slightly below than what many analysts estimated. There has been a marginal increase in total revenues; from Rs 2,982.8 crore a year ago to Rs 3,041.5 crore this quarter.

Q2′ 2020Q1′ 2020Q2′ 2019QoQYoY
Revenue3,04133252,982-8.5%1.8%
Net Profits486525437-7.4%11.15%
Values in Crore Rupees

“The past three months have witnessed volatility, uncertainty and stresses that we had never imagined before nor experienced. This led to disruptions across the value chain of the company that has impacted our results, though we have built back momentum strongly as we ended the quarter,” said Suresh Narayanan, Chairman and Managing Director, Nestlé India.

Nestle India has been fast to react to the upliftment of Lockdown. Their eight factories had returned back to the pre-COVID manufacturing capabilities. Sales & distribution segment is yet to move smoothly because of the various safety measures and fears among the public. A major reason for slightly reserved numbers is due to the 9.3% decline in export sales due to the nationwide lockdown.

In the past few days, Nestle India’s competitors like Marico, HUL and Britannia has also declared their results. In comparison to Nestle’s 11% rise in net profits, Marico, HUL and Britannia have witnessed an increase in their bottom line by 23%, 7% and 117%. One thing common in these FMCG firms has been a cut in the advertisements expenses. With a higher demand in the market already, decisions of companies to save their budgets has helped them to increase their profits margin.

(Nestle India follows January-December financial year, thus declaring Q2 results)