HUL to ramp up investments, expects demand rebound on rural uptick, favorable macros

Hindustan Unilever shares have risen around 3 percent over the past year.

Consumer goods major Hindustan Unilever is looking to fire more investments in the coming quarters expecting that the urban and rural buyers will spend more, taking adavantage of the tax rebates, low interest rates, and receding food inflation. The maker of popular brands like Dove, Lipton, and Surf Excel, expects the first half of 2026 to be better than the second half, triggered by favorbale macro.

"We have seen urban markets moderating and rural markets gradually recovering. We do believe that both should improve over the next three to six months. The triggers are favorable, and it's still a great market to be in. So, we believe that things should hopefully improve. As rural demand remains resilient, we expect both engines of the consumption market to regain momentum," CEO and Managing Director, Rohit Jawa, told journalists in a post-earnings briefing.

Going forward, the consumer goods giant will pursue volume-led growth by catering to value-conscious rural consumers looking to upgrade. A rise in small pack sales — driven by rural demand outpacing urban — underscores this shift. "Consumer freedomizing across all parts of the India consumer pyramid. Every Indian wants to aspire to slightly better quality of life. We as HUL reach every one. We have the ability to offer consumers that improvement in their experience of product with an accessible price point," Java added.

Meanwhile, the company also observed the premiumisation trend buckling slightly in recent quarters, however it shrugged off any impact.

"The premiumization trend is secular. In the recent quarters, we see the premium end is not growing as fast as it was growing in the last few quarters. We must not only concern ourselves with few quarters because if you zoom out, the general story of consumers upgrading," Java said.

The FMCG giant has guided to maintain the EBITDA margin within the range of 22-23 per cent, as it looks to accelerate investments to transform its existing portfolio, while the demand rebounds.

"We've strengthened our portfolio through acquisitions for new brands, deepened our capability. So we believe that this is really good time for us to lean in and invest for growth with that as a single minor objective and basically make sure that we are going with all of our guns blazing in the market for the next few quarters," said Java.

In FY25, Hindustan Unilever (HUL) accelerated its portfolio transformation through increased innovation in high-growth segments, strategic investments in future channels, and key portfolio actions including the acquisition of D2C brand Minimalist, which crossed Rs 500 crore in turnover and the divestment of Pureit.

Q4 results
Hindustan Unilever Ltd's Q4 FY25 standalone net profit was up 3.7 per cent YOY per cent to Rs 2,493 crore, slightly above street estimates. According to a Moneycontrol poll of 12 brokerages, HUL's January-March quarter net profit was estimated to rise 3.1 percent to Rs 2,470 crore, reflecting urban demand drag, higher input costs and margin challenges.

HUL's standalone revenue rose 2.4 per cent to Rs 15,214 crore. On a consolidated basis, net profit slipped 3.7 per cent to Rs 2,464 crore. During the quarter, the company reported underlying volume growth of 2 per cent and underlying sales growth of 3 per cent.

It sees gross margin to moderate further due to commodity inflation, and cost absorbtion measures to stay competitive. During the year, the maker of Brooke Bond and Red Label, faced 20 per cent commodity inflation in tea costs, however chief financial officer Ritesh Tiwari said, "We have priced lower than inflation, which is why we have higher prices cost hurt, be it tea or be it coffee, which also has an impact on our food's margin."

The FMCG major declared a final dividend of Rs 24 per equity share of face value Re 1 each. With this, HUL's total dividend payout for the financial year 2024-25 stands at Rs 53 per share, including an interim dividend of Rs 19, and a special dividend of Rs 10.

Segment results
Personal Care posted a 5 per cent rise in profit with low single-digit sales growth amid pricing pressure. Within the segment, Bodywash grew in double digits, strengthening its market leadership. Non-hygiene products saw high single-digit growth, while skin cleansing reported low single-digit growth.

The Home Care segment contributed Rs 5,815 crore to the consolidated revenue, rising 2 per cent YOY, helped by "outperformance" in premium fabric wash and fabric conditioners, the company said in an investor presentation. Its liquids portfolio also helped boost the sales.

Beverages saw low single-digit growth in tea, led by pricing, while coffee continued double-digit growth, maintaining momentum. The company retained value and volume leadership in tea.

The Foods business consolidatred profit dropped 15 per cent to Rs 627 crore