Q2 Results Watch: HLL may lag, ITC to sparkle

JM Morgan Stanley, in a second quarter results watch report relased recently, said Hindustan Lever (HLL) could disappoint this quarter (quarter ended September 2006) with a domestic FMCG growth of around 11%. Overall growth is likely to be 9% on account of a decline in exports and non-FMCG businesses. HLL is expected to report 14% earnings growth in the quarter.

"ITC is likely to continue with its solid performance driven by all its businesses. Cigarette revenue growth is likely to be 14%, hotels business would continue to demonstrate margin expansion (EBIT growth can be 120%) and paper business could report 10% revenue growth.

"Colgate's earnings growth is expected to be 41%, and revenue is expected to grow 15%. There could be 257 bps operating profit margin expansion on the back of price increases and tax benefits.

"Marico is expected to do well with an earnings growth of 67%. The growth is likely to be driven by a combination of the acquisition of Nihar and strong organic growth.

"Godrej Consumer Products is expected to report 40% revenue growth due to growth in hair colors and acquisitions of Keyline and Rapidol (to be booked for a month). Although operating profit is likely to grow strongly by around 50%, net profit growth may be lower at 26% largely due to higher tax rate, sharp potential fall in other income and increase in interest cost.

"Tata Tea is expecting revenue growth of 10% on the back of strong double digit growth in Tetley. Operating profit growth may be limited to around 8% partly due to increase in cost pressures witnessed by the company due to the increase in raw tea prices. Net profit growth is expected at around 10%during the quarter.

"Nestle is likely to report around 9% growth due to 1-3% sequential price increase in a few key categories. The overall performance is likely to be muted at 10% revenue growth, 9% operating profit growth and 9% net profit growth," the report said.

QUARTERLY EXPECTATIONS...
Rs million	REVENUE
	Sep-06	Sep-05	YoY
Hindustan Lever	29,774	27,315	9%
Colgate	3,198	2,781	15%
Tata Tea	8,567	7,788	10%
Nestle	6,935	6,248	11%
Marico	3,741	2,771	35%
ITC	26,198	21,832	20%
Godrej Consumer	2,200	1,571	40%
	EBITDA
Hindustan Lever	3,977	3,584	11%
Colgate	578	432	34%
Tata Tea	1,746	1,616	8%
Nestle	1,394	1,278	9%
Marico	590	309	91%
ITC	9,838	8,198	20%
Godrej Consumer	405	270	50%
	PAT
Hindustan Lever	3,718	3,274	14%
Colgate	436	309	41%
Tata Tea	1,136	1,032	10%
Nestle	868	793	9%
Marico	339	202	68%
ITC	6,941	5,723	21%
Godrej Consumer	350	278	26%