Shares of Hindustan Unilever rose close to 3 percent on Tuesday, a day before the consumer goods company is set to report its earnings for the quarter ended March 2022.

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Shares of HUL settled at Rs 2148.15, up 47.25 points or 2.25 percent higher than their previous close on the BSE. The company's stock has gained after two days of consecutive falls. HUL stock touched an intraday high of Rs 2157.7 and outperformed the sector by 0.27 percent.

It also traded higher than its 20-day and 50-day moving averages but lower than 5, 100 and 200-day moving averages.

In the past month, HUL shares have made investors richer by 8.5 percent as against the benchmark Nifty which declined almost half a percent during the period. However, so far in 2022 (year-to-date), the stock has erased more than 9 percent of investors’ wealth while the Nifty slipped 2.7 percent this year.

Impact of Indonesia’s palm oil export ban

Shares of fast-moving consumer goods (FMCG) companies dropped up to 6 percent on the BSE in Monday’s intra-day trade after Indonesia, the world's top palm oil producer, announced an export ban on palm oil from April 28, 2022. Palm oil is used in products like cooking oils, processed foods, cosmetics and biofuels.

Frontline stocks like HUL, Britannia Industries, Godrej Consumer Products, and Marico were down between 4 percent and 6 percent on the BSE.

The ban comes amid soaring domestic prices. Indonesia accounted for 55 percent of India’s total palm oil imports in FY21 and 40 percent in FY22 (Apr-Feb), according to CLSA.

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The brokerage firm expects edible oil prices to surge in the near term, causing further margin stress for consumer companies. HUL and Godrej Consumer (GCPL) with high exposure to palm oil will be the most impacted, CLSA said, adding companies like Britannia, Marico, Nestle, Dabur and QSR players are also likely to feel pressure from the inflationary trend.

Jefferies, on its part, said, “Listed players face earning risks on demand and margin - HUL, GCPL & packaged foods have the highest exposure.”

What do analysts expect from Q4 earnings?

Even as investors on Dalal Street are looking forward to HUL’s results for the January-March quarter of FY22, analysts had earlier said most FMCG businesses would see revenue growth in the high single to low double digits, but this would be mostly driven by price increases, which would not translate into profits due to input inflation.

Also Read: Adani Wilmar jumps, FMCG stocks sink after Indonesia bans palm oil export

Q4 updates from FMCG companies so far stand witness to the trend. While Titan's jewellery business is declining, Godrej Consumer Products volume growth is flat. Meanwhile, Hindustan Unilever (HUL) is expected to announce a volume contraction.

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First Published:Apr 26, 2022 3:25 PM IST