July 21, 2023 (MLN): Shares of consumer goods major Hindustan Unilever fell as much as 2.4% on Friday after reporting a smaller-than-expected increase in June-quarter profit, hurt by higher costs and tepid demand for branded tea, as Reuters reported.
"There has been a perceptible pick-up in competitive intensity across some categories, especially at the mass end, as inflation cooled off," analysts at Jefferies wrote in a note.
HUL was hit by the competition from local and regional players which re-entered the market, especially in the tea, laundry and soap segments they had previously exited during peak inflation, Jefferies added.
Demand is yet to fully rebound in rural India, which is worst affected by high inflation. Sales of branded tea have not recovered as consumers choose unbranded alternatives, the Indian unit of UK's Unilever said on Thursday after reporting its quarterly earnings.
Fast-moving consumer goods markets are recovering gradually although the operating environment remains "challenging," CEO Rohit Jawa said.
The Dove soap maker's profit rose 8% to 24.72 billion Indian Rupees (INR) ($301.3 million) for the quarter ended June 30, below the average analysts' estimate of INR25.97bn.
Shares of the company touched their lowest level since June 27, leading the losses in the benchmark Nifty FMCG index.
