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HUL Q2FY22 results: Some mild warning signs getting flashed, says Prakash Diwan

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FMCG major Hindustan Unilever Ltd (HUL) on Tuesday reported an 8.9 percent year-on-year rise in net profit to Rs 2,187 crore for the quarter ended September 30, meeting Street estimates. Shirish Pardeshi of Centrum Broking, and Prakash Diwan, market expert, shared their perspectives.

FMCG major Hindustan Unilever Ltd (HUL) on Tuesday reported an 8.9 percent year-on-year rise in net profit to Rs 2,187 crore for the quarter ended September 30, meeting Street estimates. Shirish Pardeshi of Centrum Broking, and Prakash Diwan, market expert, shared their perspectives.
“The results were in-line with our expectations,” said Pardeshi.
“My sense is these numbers are almost like a pause of sorts. The stock would consolidate from hereon, given these numbers, and not attract more attention or capital. These numbers probably tell you that there are some mild warning signs that are getting flashed,” said Diwan.
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“One of the key areas to watch for companies like HUL will be the inflationary impact of raw material cost – this time they have probably got away with a slight improvement in gross margin, but at the net margin level, I don’t think it's something very favourable or promising, going ahead. So, these numbers tell you that the ability to price products higher is only, probably, prevalent in the premium segment. In the rest of the segments, particularly food, there is this huge element of competitive intensity as well,” he explained.
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