Detailed Narrative
Hindustan Unilever reported its Q3 FY25 results, with a turnover of INR15,195 crores. The company experienced a 2% underlying sales growth, primarily driven by pricing actions, while underlying volume growth remained flat. Gross margin was maintained at 50%, and the EBITDA margin stood at 23.5%, aligning with the management's target range of 23-24%. Profit After Tax Before Exceptional Item📎s (PAT BEI) was flat year-on-year at INR2,540 crores, but Profit After Tax (PAT) saw a significant 19% increase to INR3,001 crores, largely attributed to the disposal of the Pureit business.
Segment-wise, Home Care was a strong performer, delivering 6% USG and high single-digit UVG, with fabric wash and dishwash liquids showing robust growth. Beauty & Wellbeing, however, saw a modest 1% growth, impacted by a delayed winter. Personal Care revenue declined by 4%, mainly due to the hygiene segment of skin cleansing, though non-hygiene segments showed positive momentum. Foods category revenue remained stable, with mid-single-digit UVG decline, while Tea grew in low-single digits and Coffee maintained double-digit growth.
A key strategic highlight was the announcement of the acquisition of a majority stake (90.5%) in Minimalist, a digital-first premium beauty brand, for a pre-money enterprise value of INR2,955 crores. This move aligns with HUL's strategy to build its Beauty & Wellbeing portfolio, particularly in high-growth, actives-led masstige segments. The transaction is expected to close in Q1 FY26, with the remaining 9.5% stake to be acquired in two years. Management also detailed the demerger of its Ice Cream business into Kwality Walls (India) Limited, aiming to unlock its full potential.
Looking ahead, management anticipates the current moderation in demand trends to continue in the near term, with gradual rural recovery and moderating urban growth. They expect low single-digit price growth and aim to maintain EBITDA at the lower end of the 23-24% range amidst inflationary material prices. The company is committed to a 900 bps improvement in its Beauty & Wellbeing portfolio's shift towards premium over the next few years, even if it means a temporary decline from the current healthy B&W margins of around 30% due to increased investments. They expressed confidence in their strategic pillars of 'focus, excel, and accelerate' to drive competitive volume-led growth and capitalize on long-term opportunities in the FMCG industry.