Hindustan Lever was the focus of institutions ahead of its results to be declared later on Wednesday.

And even as the results may not prove exemplary, anticipation has seen the scrip of Hindustan Lever rise 2.58% to Rs 145.15 on BSE by 10:34 IST.

By that time, HLL recorded substantial volumes of over 200,000 shares. The scrip has not been the subject of Dame Fortune of late. In fact, it lost 20.5% to its 52-week low of Rs 138.50 on 15 April 2003 from Rs 174.30 on 24 February 2003.

Value buying, perhaps, is prompting the scrip's rise today. The market seems to have already discounted the expected quarterly performance of the company in previous sessions. The stock is not, in any case, expected to witness a major fall from the current levels. This is why players are accumulating the stock.

For the first quarter ended 31 March 2003, a capitalmarket.com poll of six FMCG analysts has predicted a 6.6% to 10.8% fall in net profit to Rs 382 crore-Rs 400 crore (Rs 3.82-4 billion) for HLL. Sales for the quarter are expected to be between Rs 2,324.5 crore (Rs 23.24 billion) and Rs 2,488 crore (Rs 24.88 billion).

Domestic sales of FMCG companies have been adversely affected due to the proposed introduction of the uniform Value Added Tax regime, at the rate of 12.5%, from 1 June 2003, replacing the sales tax levied by various state governments. Due to this, many dealers have cut down their existing inventories and are postponing fresh intake till the time there is more clarity on VAT.

The current rate of sales tax is around 7 to 8% on an average, across the country. However, the uniform VAT is fixed at 12.5%. In addition, considering trade discounts and commissions, the effective rate could likely be around 15.5%. Further, the industry is also worried about the treatment of stock-in-trade of goods at the wholesaler and retailer end. As a result, some wholesalers and retailers have requested companies to take back stocks as of 31 March 2003, while a few others have substantially reduced their purchases.

HLL continues to pass through a turbulent period, with a substantial slowdown in its domestic business in the past 8-12 quarters. An adverse monsoon in 2002 also further distanced any recovery in demand for the company's products. Analysts say demand is likely to remain subdued, with growth expected to remain flat for the next two quarters. Although the management is aggressively restructuring its business, the macro environment remains challenging.

The company had earlier declared a 300% (Rs 3 per share) dividend for the year ended 31 December 2002. The company has fixed 8 April to 23 April as book closure tenure for allotting dividend to shareholders.

For the full year ended 31 December 2002, HLL recorded a 7% growth in bottom line to Rs 1,755.68 crore (Rs 17.55 billion), but a 7% drop in top line to Rs 9,954.85 crore (Rs 99.54 billion). For the fourth quarter ended 31 December 2002, HLL registered a 7% growth in bottom line to Rs 466.51 crore (Rs 4.66 billion) on a 2% decline in top line to Rs 2634.5 crore (Rs 26.34 billion). At the profit after tax but before EO level, the company registered a 9% growth in net profit to Rs 542.84 crore (Rs 5.42 billion).

As on 31 December 2002, the promoters' holding in HLL was 51.6%, while the public, domestic institutions and FIIs held 21.4%, 13.4% and 12.83%, respectively.

BSE code: 500496