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    Hind. Unilever

    HINDUNILVR
    Fast Moving Consumer Goods·23 Oct 2025
    Management Summary

    Hindustan Unilever reported a competitive performance for the September quarter and first half of FY26 amidst a challenging macroeconomic environment marked by GST transitions and prolonged monsoon. The company delivered 2% USG for the quarter and 3% for the first half, with EBITDA margins at 23.2% and 23% respectively, reflecting strategic investments. Management outlined four key priorities focused on volume-led growth and market development, while also providing timelines for the Ice Cream business demerger.

    Highlights

    8

    • Turnover for Q2 FY26 was ₹16,061 crores.

    • Underlying Sales Growth (USG) for Q2 FY26 was 2%, primarily price-led.

    • EBITDA margin for Q2 FY26 stood at 23.2%, a year-on-year dilution of 90 basis points, in line with investment strategy.

    • Profit After Tax (PAT) before exceptional items declined 4% in Q2 FY26, while reported PAT grew 4% due to a one-off tax impact.

    • First-half FY26 USG was 3%, with Underlying Volume Growth (UVG) at 2%.

    • First-half FY26 EBITDA margin was 23%, down 110 basis points year-on-year, consistent with guidance.

    • GST rate reforms directly benefited 40% of the portfolio, leading to pricing and grammage interventions across more than 1,200 SKUs.

    • Ice Cream demerger is expected to be completed by December 2025, with listing anticipated in Q4 FY26.

    What Changed3

    vs Q3 FY26

    Guidance items4 → 7 (+3)Risks discussed4 → 0 (-4)Q&A highlights3 → 0 (-3)

    Guidance & targets

    7
    CategoryTargetPriority
    Other
    Ice Cream Demerger Completion
    by December
    		High
    Other
    Ice Cream Business Listing
    Quarter 4 of Financial Year 2026
    		High
    Other
    Employee Costs + Other Expenses as % of Revenue
    18% to 18.5%
    		High
    Margin
    Reported EBITDA Margin Improvement (Post Ice Cream Demerger)
    50 to 60 bps
    		High
    Margin
    EBITDA Margin (Core Business)
    22-23%
    		High
    Volume
    Volume Growth
    better in second half compared to first half
    		Medium
    Revenue
    Price Growth
    low-single digit
    		Medium
    2 min read

    Detailed Narrative

    Hindustan Unilever reported its Q2 FY26 and H1 FY26 results, navigating a complex macro-economic landscape. For the quarter ended September 30, 2025, the company achieved a turnover of ₹16,061 crores, with an Underlying Sales Growth (USG) of 2%, primarily driven by pricing. The EBITDA margin for the quarter stood at 23.2%, reflecting a 90 basis point year-on-year dilution due to increased investments in brands and business, including an 80 bps rise in Advertising & Promotion (A&P) spends. Profit After Tax (PAT) before exceptional item📎s saw a 4% decline, while reported PAT grew 4% due to a one-off📎 positive impact from the resolution of prior years' tax matters. For the first half of FY26, USG was 3% with Underlying Volume Growth (UVG) of 2%, and EBITDA margin was 23%, down 110 bps year-on-year, aligning with previous guidance.

    The quarter was significantly influenced by recent GST reforms, which directly benefited 40% of HUL's portfolio, moving it to the 5% GST slab. This led to pricing and grammage interventions across over 1,200 SKUs, passing the benefits to consumers. However, these changes caused transitory📎 disruptions in trade channels and consumer purchasing, impacting sales by up to 2% at an aggregate HUL level, largely volume-driven. Prolonged monsoon conditions also temporarily dampened demand. Commodity trends were divergent, with inflationary pressures in Palm Oil and SMP, while Tea and Crude Oil prices trended downward, leading to mid-single-digit negative pricing in Home Care due to price cuts.

    Segment-wise, Home Care delivered a competitive performance with mid-single-digit volume growth, though USG was flat due to price reductions. Beauty & Wellbeing recorded 5% USG, driven by Skin Care and Health & Wellbeing, with OZiva showing triple-digit growth. Hair Care turnover declined due to GST rate rationalization. Personal Care turnover was flat, impacted by GST transition, despite double-digit growth in premium soaps. Foods delivered 3% USG with low-single-digit UVG, and Beverages saw double-digit growth. The Ice Cream business declined due to monsoon and GST impact.

    Management provided an outlook indicating that GST-related impacts would continue through October, with normal trading conditions expected from early November. They anticipate a gradual manifestation of disposable income benefits on demand. For the second half of FY26, volume growth is expected to be better than the first half, with low-single-digit price growth projected if commodity prices remain stable. The company reiterated its near to mid-term EBITDA margin guidance of 22-23% for the core business, noting that the Ice Cream demerger, expected by December 2025 with listing in Q4 FY26, would add 50-60 bps to the reported EBITDA margin annually. Priya Nair, in her first 90 days as CEO, outlined four key priorities: radical consumer segmentation, elevating brand desirability, accelerating future-proofing capabilities (especially in digital commerce), and reshaping the portfolio for high-growth demand spaces, emphasizing a volume-led growth strategy.

    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.