Double-digit growth forecasted for HUL's ice cream business? All eyes on premiumisation strategy

Hindustan Unilever Ltd (HUL) is poised to maintain robust growth in its ice cream business, with forecasts suggesting double-digit expansion. However, operating profit is expected to remain steady at current levels, while price growth is likely to be in the low single digits. Earnings per share (EPS) are projected to grow in double digits, driven by a strategic emphasis on its premium portfolio.

Capital Markets Day 2024: Key focus areas

HUL is hosting its Capital Markets Day 2024 today, with an analyst meeting scheduled from 11 AM to 6 PM. Management commentary will be closely monitored for updates on:

1. Urban and rural demand trends: Insights into the timeline for urban demand recovery will be critical.

2. Festive season performance: The growth trajectory of the premium segment and its future outlook will be under scrutiny.

3. Unilever’s strategy in India: Analysts are keen to hear about the parent company's “double-down” approach and its implications for HUL.

4. Premiumisation plans: Updates on the company’s focus on premium products and their market impact are anticipated.

5. Condiment business expansion: Investors expect clarity on growth plans in this segment.

6. Soap formulation changes: Market feedback on recent adjustments in Lifebuoy and Lux formulations will be evaluated.

Margins and cost pressures

In the near term, margin performance will be influenced by rising costs of chemo (chemicals), a key input. Management’s view on mitigating these pressures is awaited.

Ice cream demerger and value unlocking

HUL’s plans for its ice cream business, including potential demerger and value unlocking opportunities, will be another area of interest for stakeholders.

The company’s ability to navigate cost pressures while sustaining premiumisation-driven growth remains a key driver for future performance. Analysts will also track management's stance on balancing growth in rural and urban markets amidst evolving economic conditions.