After clocking a double-digit 11% volume growth in the December quarter, the Street was expecting Hindustan Unilever Ltd’s (HUL) volume growth for the March quarter to tone down to around 7%. After all, the base in the third quarter was low with a 4% de-growth in the year-ago period, while volumes had grown 4% in the year-ago March quarter.

But despite the higher base effect, the company reported an 11% growth in volumes again.

“Hindustan Unilever is clearly executing at a much higher level than peers. We believe this is partly because it was perhaps the best prepared for GST (goods and service tax) and hence has made the most of this tailwind for the organized sector players,” analysts at Kotak Institutional Equities said in a note to clients. GST is short for the goods and services tax.

Besides, its advertising expenses increased by a fourth for the March quarter, suggesting HUL’s confidence in the operating environment.

The home care segment performed well, which helped the company’s overall profit growth as well. The segment recorded double-digit volume growth and a robust 31% growth in its earnings before interest and tax (Ebit). Ebit of the personal care segment increased at a much slower pace of 8%.

Overall, HUL’s Ebitda increased at a healthy 24% year-on-year to Rs2,048 crore, while Ebitda margin rose a smart 240 basis points to 22.5%. Ebitda is short for earnings before interest, tax, depreciation and amortization.

So far, so good. But the key thing to figure out is whether HUL’s results indicate that underlying demand has improved. A look at the results of other fast-moving consumer goods (FMCG) firms suggests that is not the case. According to Kotak, volume growth trends reported by sector peers for the March quarter have been mixed.

Of course, even though HUL has done better than most peers, its valuations too are stretched. Most FMCG stocks have outperformed the benchmark Sensex in the past one year and the company’s shares are no exception to that trend.

The HUL stock trades at a pricey valuation of almost 60 times estimated earnings for this fiscal year, based on Bloomberg data. But it is at least growing earnings at a decent pace, and the March quarter results could well offer some support to valuations from a near-term perspective.

What’s more, the good run on the volume front may continue. After all, the June 2017 quarter volume growth was flat. Trade sentiment remained cautious, particularly in the run-up to the GST implementation, the company had said last year at the time of announcing June-quarter results.

With the base favourable for the current quarter, investors will now follow the extent of outperformance that HUL can deliver. However, crude oil prices have risen and input costs will start pinching more. That may take some sheen away from earnings in the coming quarters.