HUL signals cruise control on consumption journey

Lower food inflation, falling interest rates, rain cues promise greater demand ahead

- Suneera Tandon & Gaurav Laghate

Stars have aligned favorably for India's consumption economy, Hindustan Unilever Ltd (HUL) indicated on Thursday, expressing confidence that its next six months will be considerably better than the last.

Lower food inflation, falling interest rates and a positive monsoon promise greater demand in the days ahead, India's largest packaged consumer goods maker said, after reporting earnings that met Street estimates.

"We feel this is a good moment for the consumer packaged goods industry. Macros are turning favorable," chief executive officer and managing director Rohit Jawa said at a post-earnings meeting. "Rural markets have recovered, and have been resilient and robust over the last few quarters. Monsoons have been good, projections have been decent, reservoirs are full, and agri output is strong."

While India's weather office has predicted above-normal monsoon for the year, the Reserve Bank of India (RBI) has begun its rate cut cycle, reducing the repo rate by half a percentage point since February. Meanwhile, retail inflation fell to 3.34% in March, the lowest since August 2019. Food inflation stood at 2.69%, against 8.52% a year ago. Jawa said these factors will be an important trigger, especially for companies such as HUL with a large rural portfolio.