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    Hindustan Unilever Limited

    HINDUNILVR
    Fast Moving Consumer Goods·23 Oct 2025
    Management Summary

    Hindustan Unilever Limited reported a turnover of ₹16,061 crores with 2% USG for Q2 FY26, navigating challenges from GST reforms and monsoon disruptions. Gross margins improved sequentially, but EBITDA margin saw a 90 bps dilution due to increased A&P investments. PAT grew 4% due to a one-off tax benefit, while PAT before exceptional items declined 4%. The company remains focused on volume-led growth and strategic priorities despite short-term headwinds.

    Highlights

    5

    • Turnover of ₹16,061 crores, delivering 2% Underlying Sales Growth (USG) in a challenging environment.

    • Gross Margin stood at 50.9%, an improvement of 130 bps sequentially as transitory price versus cost gap moderated.

    • Profit After Tax (PAT) grew 4% year-on-year, primarily due to a one-off positive impact from the resolution of prior years' tax matters.

    • Home Care segment delivered mid-single digit Underlying Volume Growth (UVG) on a strong base.

    • Health & Wellbeing segment maintained strong triple-digit growth trajectory, fueled by superior, science-backed products.

    Concerns

    4

    • EBITDA margin diluted by 90 bps year-on-year to 23.2% due to stepped-up investments in brands and business.

    • PAT before exceptional items declined 4%, reflecting lower EBITDA and a decline in net finance income.

    • Prolonged and intense monsoon conditions disrupted supply chains and temporarily dampened demand.

    • GST rate reforms led to transitory disruptions across trade channels and delayed consumer pantry replenishment, impacting sales during the quarter.

    Key financials

    Single quarter

    06 metrics
    1. 01Turnover₹16,061 Cr
    2. 02Underlying Sales Growth2%
    3. 03Gross Margin50.9%
    4. 04EBITDA Margin23.2%-0.9%YoY
    5. 05PAT before exceptional—-4%YoY

    Segment breakdown

    Home Care
    — Underlying Volume Growth0% Underlying Sales Growth
    Beauty & Wellbeing
    5% Underlying Sales Growth
    Hair Care
    — Turnover Growth
    Skin Care including Colour Cosmetics
    — Growth
    Health & Wellbeing
    — Growth
    Personal Care (overall)
    0% Turnover Growth
    Skin Cleansing
    0% Turnover Growth
    Oral Care
    — Turnover Growth
    Foods
    3% Underlying Sales Growth— Underlying Volume Growth
    Beverages
    — Growth
    Tea
    — Growth
    Coffee
    — Growth
    Lifestyle Nutrition
    — Underlying Volume Growth
    Packaged Foods
    — Performance
    Ice Cream
    — Performance
    List

    Capital allocation

    4
    high confidence
    CategoryHeadline
    Dividend

    ₹19/share (interim)

    M&A

    Minimalist

    acquisition · integrated

    M&A

    OZiva

    acquisition · integrated

    Liquidity

    Liquidity disclosed

    Cash reserves reduced post special dividend payout and Minimalist acquisition.

    Guidance & targets

    8
    CategoryTargetPriority
    Profitability
    EBITDA Margin
    22-23%
    		High
    Profitability
    EBITDA Margin (post Ice Cream demerger)
    50-60 bps improvement
    		High
    Market Conditions
    Trading Conditions
    normal
    		High
    Demand
    Disposable Income Benefits
    manifest gradually
    		Medium
    Pricing
    Price Growth
    low-single digit
    		Medium
    Growth
    Growth of second half of financial year
    better than the first half
    		High
    Volume Growth
    Volume Growth
    better outcome
    		High
    Demerger
    Ice Cream Demerger Completion
    by December
    		High

    What to watch in Q3 FY26

    5

    GST impact normalization and market stability

    early November
    CurrentImpact continues through October, with price volatility and trade destocking.
    TargetNormal trading conditions and price stabilization.

    Why it matters

    Normalization of market conditions post-GST reforms is crucial for demand recovery and stable sales.

    We anticipate normal trading conditions starting early November, once prices stabilise, paving the way for a gradual and sustained market recovery

    Risks & concerns

    4
    RiskSeverity

    Monsoon impact on supply chains and demand

    Prolonged and intense monsoon conditions across several regions disrupted supply chains and temporarily dampened demand. — Management acknowledged

    medium

    Transitory disruptions from GST rate reforms

    Changes led to transitory disruptions across trade channels, postponement of orders, and delayed consumer pantry replenishment. — Management acknowledged

    medium

    Commodity price volatility

    Commodity trends remained divergent, with inflationary pressures in Palm Oil and SMP, while Tea and Crude Oil prices trended downward. — Management acknowledged

    medium

    Impact of weather patterns (winter season)

    Company remains vigilant about the evolving impact of weather patterns, particularly as the winter season approaches and the effects of a prolonged monsoon play out. — Management acknowledged

    medium

    Q&A highlights

    8

    “Going forward, we don't expect further margin impact, Vivek, coming in from GST transition. Of course, the entire GST rate reduction is cost neutral to us. It's something which Government has given change and hence, no cost implications on us.”

    Clarifies that while trade support impacted Q2, no further margin impact from GST transition is expected, and the rate reduction is cost-neutral.

    asked by Vivek from Jefferies

    2 min read6 chapters

    Detailed Narrative

    01

    Q2 FY26 Performance Overview

    Hindustan Unilever Limited reported a turnover of ₹16,061 crores for Q2 FY26, achieving a 2% Underlying Sales Growth. The growth was primarily price-led, influenced by carry-forward pricing in Skin Cleansing, Beverages, and Skin Care. Gross Margin stood at 50.9%, reflecting a 130 bps sequential improvement as the transitory📎 price-versus-cost gap moderated. EBITDA margin, however, saw a 90 bps year-on-year dilution to 23.2% due to increased investments in brands and business. PAT grew 4% due to a one-off📎 tax benefit, while PAT before exceptional items📎 declined 4%.

    02

    Impact of GST Reforms and Market Dynamics

    The recent GST rate reforms directly benefited 40% of HUL's portfolio, moving to the 5% GST slab. The company promptly passed on the entire benefit to consumers through pricing and grammage interventions across over 1,200 SKUs. However, these changes led to short-term transitory📎 disruptions in trade channels, including destocking and delayed consumer pantry replenishment, impacting sales during the quarter. Management estimates an overall volume impact of up to 2% due to GST transition.

    03

    Segmental Performance Highlights

    Home Care, the largest segment, delivered a competitive performance with mid-single digit volume growth, though USG was flat due to prior price reductions. Beauty & Wellbeing achieved 5% USG, driven by strong performance in Skin Care (high-single digit growth) and Health & Wellbeing (triple-digit growth). Hair Care, however, saw a decline in turnover due to GST rate rationalization. Foods delivered 3% USG with low-single digit UVG, with Beverages showing double-digit growth.

    04

    Strategic Priorities Under New Leadership

    The new CEO, Priya Nair, outlined four key priorities: radical consumer segmentation (Power Spenders, Premiumizers, Democratizers), elevating brand desirability through modernization and premiumization, accelerating future-proofing of capabilities (social-first demand generation, d-commerce expansion), and reshaping the portfolio by investing disproportionately in high-growth demand spaces. These priorities aim to drive volume-led profitable growth and market development.

    05

    Outlook and Demerger Update

    HUL anticipates normal trading conditions to resume by early November as prices stabilize post-GST impact. The benefits of increased disposable income are expected to manifest gradually. Management projects low-single digit price growth if commodity prices remain stable. Overall growth for the second half of the financial year is expected to be better than the first half, with a better outcome for volume growth. The Ice Cream demerger is expected to be completed by December, with listing in Q4 FY26, which will add 50-60 bps to the reported EBITDA margin guidance of 22-23%.

    06

    E-commerce and Penetrated Categories Strategy

    E-commerce, including quick commerce, continues to be a focus area, with the business doubling year-on-year. HUL designs channel-specific packs to ensure profitability and minimize channel conflict in this investment phase. For highly penetrated categories like Skin Cleansing and Hair Care, the strategy involves driving premiumization and market development, moving consumers from basic products to liquids, and expanding into new formats and offerings to unlock further growth.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.