Hindustan Unilever Ltd (NSE:HINDUNILVR) in the third quarter has posted 28% rise in its third-quarter profit due to the higher sales from its personal care business.

There is a double digit growth across categories in the Homecare business. Therefore, in the third quarter the consolidated net profit is of Rs 13.26 billion compared to Rs 10.38 billion in year-ago period. The company has posted the sales of Rs 8,323 crore compared to Rs. 8121 crore in the corresponding quarter last year.

Further, during the third quarter, there is an 11% growth in the underlying volume, 17% growth in the Comparable Domestic Consumer Growth and 110bp up in the Comparable EBITDA margin. The analysts were expecting the volume growth at around 8-9 percent and the adjusted profit to rise 25.7%.

Moreover, in the third quarter, the Cost of Goods Sold was lower, due to a strong savings program. The company has stepped up the Advertising and Promotion spends to support innovations and market development activities.

Reduction in GST rate

GST rates were reduced for some of the Hindustan Unilever’s categories from 28% to 18%, effective from 15th November, 2017. However, the company was not able to pass on the entire benefit of this rate reduction on some of the pipeline stocks during the transition. An estimated value of Rs. 119 crores was proactively disclosed to the company. This amount will not be treated as revenue and will be accounted as a liability as on 31st December 17.

Recently, anti-profiteering investigator Directorate General of Safeguards (DGS) had a sent the copy a notice to HINDUNILVR for alleged profiteering under the goods and service tax (GST) regime. For this, the company has communicated to trade and has asked them to pass on the benefits to consumers.

Patanjali aims to beat HUL next year in sales

Patanjali has aimed to overtake the company Hindustan Unilever in sales and has announced its entry into e-commerce for its FMCG items. They are partnering major players in this space, including Amazon and Flipkart, and is targeting over Rs 10 billion (Rs 1,000 crore) through online sales this year itself. Patanjali had crossed Rs 10 crore in online sales in December.

Hindustan Unilever Stock Price Outlook

The company is positive about the mid-term outlook of the industry, will be investing in the core brands and the future developing categories. The stock will outperform in the long term. Currently the investors should “Hold” the stock.