HUL | Mango Bunch

Horlicks to redesign its label; not considered a health drink anymore

Sneha Sengupta — Fri, 26 Apr 2024 17:59:25 +0000

Hindustan Unilever Limited (HUL), the business that makes well-known drinks like Boost and Horlicks, is completely redesigning their labels. “Functional and Nutritional drinks” is the new category that replaces the term “health drink.”

This action is a result of government restrictions that severely restricted deceptive labeling techniques. E-commerce platforms have been instructed by the Ministry of Commerce and Industry to discontinue categorizing beverages such as Horlicks as “health drinks.”

HUL disclosed the change in their labeling approach on April 24th at their earnings news conference. Ritesh Tiwari, their chief financial officer, gave an explanation of the change.

Stated changes

HUL believes that changing the term “health drinks” to “Functional and Nutritional drinks (FND)” will make the category description more transparent and truthful.

No “Health Drink” Classification: There isn’t a category for “health drinks” under India’s 2006 Food Safety and Standards Act (FSS Act).

Excessive Sugar: Several of these drinks include more sugar than is appropriate for a “health” category, according to the National Commission for Protection of Child Rights (NCPCR).

FSSAI Rules: According to the Food Safety and Standards Authority of India (FSSAI), the word “health drink” is defined, and it is against the law to use it in any way that does not comply with the rules.

What distinguishes a nutrition drink from a health drink?

The definitions of health drinks, nutritional drinks, and functional drinks might range depending on the regulatory body and the geographical area, according to Dr. Suranjit Chatterjee, senior consultant in internal medicine at Indraprastha Apollo Hospitals.

“Generally,health drinks are considered beverages that provide essential nutrients and are marketed for their potential health benefits. Nutritional drinks, on the other hand, are formulated to meet specific nutritional requirements, often targeting individuals with particular dietary needs or medical conditions. Functional drinks, meanwhile, are beverages that claim to provide additional physiological benefits beyond basic nutrition, such as enhancing cognitive function, boosting energy levels, or aiding digestion,” Dr Chatterjee mentioned in an interview with Indian Express.

According to Dr. Chatterjee, health drinks generally contain added sugars, which can be harmful to health if eaten in excess, even though they do contain certain nutrients like vitamins and minerals.

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Hindustan Unilever to invest in six growth areas, aims to boost margins for a better product mix

Sneha Sengupta — Wed, 24 Apr 2024 17:31:07 +0000

Hindustan Unilever (HUL) chief financial officer Ritesh Tiwari stated during the company’s Q4 earnings news conference on April 24 that operating margins will continue to rise modestly over the medium-to-long term, boosted by a stronger product mix.

According to HUL’s most recent fiscal fourth quarter results, operating profitability was further squeezed by strong competition and a downturn in demand, resulting in an EBITDA margin (earnings before interest, tax, depreciation, and amortisation) of 23.4 percent, a 30 basis point year-over-year decline. Over the same period, gross margins increased by 350 basis points year over year to 51.3 percent.

Furthermore, Tiwari stated, HUL’s growth recipe would consist of modest margin improvement combined with increased expenditures in future growth categories. The addition of premium products is part of the improved product mix.

The FMCG giant plans to record double-digit earnings per share (EPS) growth in the future.

Additionally, the business has identified six growth categories: light moisturizers, sun care, masstige, weatherproof body care, facial cleansers, and serums. According to Tiwari, the six growth regions will concentrate on urban markets.

The January–March quarter, HUL reported a 6% decline in standalone net profit, coming in at Rs 2,406 crore. The decline exceeded analysts’ estimates in a Moneycontrol survey. The company’s income from beauty and personal care, the main division, fell 2.7% during the quarter, while sales only slightly increased to Rs 14,693 crore.

Based on a revenue estimate of Rs 14,913 crore, analysts had predicted a profit of Rs 2,435 crore, on average, across nine brokerage forecasts.

Foreign investment in FMCG stocks climbs in the initial half of March

Sneha Sengupta — Thu, 21 Mar 2024 16:36:50 +0000

According to data from National Securities Depository Ltd (NSDL), foreign investors gorged on FMCG (fast-moving consumer goods) equities in the first half of March, with net purchases reaching a four-year high of ₹11,180 crore. In contrast, during the same time the previous year, the amount was ₹662 crore.

The figures were mostly influenced by the ₹3,664.1-crore purchase of 91.5 million ITC shares by sovereign wealth fund GIC (Government of Singapore Investment Corporation), which were offloaded by British American Tobacco (bat) on the stock exchanges over the two-week period.

“FIIs are long-term investors and the correction in FMCG stocks afforded them a good opportunity to pick them up at attractive valuations,” stated S.K. Joshi, ED, Khambatta Securities.

The Nifty FMCG index dropped -0.12% to 53,338.35 points during the first half of the month, while the Nifty slid -1.4% to 22,011.95 points.

Between March 1 and March 21, the price of an ITC share increased to ₹421.25 from ₹409.50, the price of a HUL share decreased to ₹2,242.35 from ₹2,409.70, and the price of a Nestle India Ltd share decreased to ₹2,553.65 from ₹2,601.45.

“Discretionaries in the premium portfolios should continue to do well. Margins are likely to improve for staples and discretionaries, aided by favourable input prices (primarily due to steady crude-oil prices). Competition, though, is expected to be intense across staples and discretionaries, on aggression by smaller companies in FMCG and existing/new entrants in paints/beers,” according to Anand Rathi in a report.

The price of an ITC share increased to ₹421.25 from ₹409.50 between March 1 and March 21, while the price of a HUL share decreased to ₹2,242.35 from ₹2,095.Moreover, foreign investment poured into other industries, bringing in ₹6,648 crore for telecommunications, ₹5,365 crore for financial services, ₹4,697 crore for services, ₹4,117 crore for consumer services, and ₹4,031 crore for real estate.

For the next three fiscal years (FY24–FY26), the research estimates a 13% compound annual growth rate (CAGR) in earnings for FMCG companies.

According to data from NSDL, other industries that received significant inflows of foreign investment included construction (₹633 crore), metals & mining (₹275 crore), capital goods (₹2,838 crore), and automotive and auto components (₹3,697 crore).

In contrast, the share price of Nestle India Ltd. dropped to ₹2,553.65 from ₹2,601.45 during the same period, and foreign investors were net sellers in a number of sectors, including healthcare (₹1,577 crore), oil, gas & consumable fuels (₹1,110 crore), information technology (₹1,104 crore), construction materials (₹271 crore), and consumer durables (₹167 crore). For the next three fiscal years (FY24–FY26), the research estimates a 13% compound annual growth rate (CAGR) in earnings for FMCG companies.