HUL sees profit margins to hold steady on volume growth, normalising trade

"With commodity prices stay within the current range, we expect a low single digit price growth going forward. Overall, we anticipate the second half of this financial year to be better than the first half of this financial year. Our EBITDA margin for the upcoming quarter is expected to remain in the similar range, excluding ice cream business," said  chief financial officer Ritesh Tiwari.

The September quarter reflected the temporary impact of the revised GST rates, which prompted consumers and trade partners to delay purchases and de-stock existing inventory. The disruption affected nearly 40% of HUL’s portfolio, primarily in skin cleansing and hair care, executives said.

"This quarter we have seen roughly 2% of impact in the quarter due to GST, largely volume-led. If you exclude the 40% portfolio impacted by GST, the remaining 60% would have grown," Tiwari said. With urban and rural demand getting stable and contributing to FMCG growth, HUL expects second half to be better than first half, with normal trading conditions expected in November.

"We expect better rupee, crop swing and  better vegetable prices going forward. The income tax change, both direct and indirect tax, which came in the budget, and GST changes happened now,  all four of them put together, it's a better economical environment going forward," Tiwari added.

The comments come as the FMCG major reported consolidated EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin of 23.2 per cent, lower by 90 basis points from a year earlier but in line with its guidance given last quarter. The company’s underlying sales growth (USG) stood at 2 percent, with flat underlying volume growth (UVG), as the performance  reflected the temporary effects of GST rate changes and extended monsoon conditions across several regions.

Q2 results 

HUL reported a 4 percent year-on-year rise in consolidated net profit for the July-September quarter (Q2 FY26) to Rs 2,694 crore, aided by a one-off tax gain. Its revenue from operations grew 2 percent on-year to Rs 16,061 crore.

Priya Nair, CEO and Managing Director, said the company delivered a “competitive performance” despite transitory disruptions. She described the recent GST reforms as a “positive step” that should bolster consumption and consumer sentiment once markets stabilise. Nair added that HUL aims to accelerate portfolio transformation through sharper consumer segmentation and stronger digital brand engagement.

FMCG major HUL recorded a net positive impact of Rs 184 crore in the second quarter from the resolution of prior years’ tax matters between UK and Indian tax authorities. However, profit after tax before exceptional items declined 4 percent year-on-year.

The company’s underlying sales growth (USG) stood at 2 percent, with flat underlying volume growth (UVG). Performance during the quarter reflected the temporary effects of GST rate changes and extended monsoon conditions across several regions. EBITDA margin came in at 23.2 percent, lower by 90 basis points from a year earlier, as the company increased investments in the business.

On a standalone basis, sales grew 1 per cent at Rs 15,418 crore during the quarter. Standalone PAT grew 3 per cent at Rs 2,690 crore.

The Board of Directors declared an interim dividend of Rs 19 per share for the financial year ending March 31, 2026.

Segment results

The homecare segment, which includes brands such as Sunlight, Comfort, Rin, and Surf, saw consolidated sales at Rs 5,664 crore down 1.1 per cent  from Rs 5,731 crore in Q2 FY 25. Home Care delivered mid-single digit underlying volume growth (UVG)  offset by price reductions taken in previous quarters, resulting in a flat underlying sales growth  (USG).

"Fabric Wash grew volumes in mid-single digit driven by strong double-digit volume growth in liquids, underpinned by successful innovations and competitive pricing actions," HUL said in a statement.

Sales for beauty and well being segment rose to Rs 3,732 crore from Rs 3,421 crore, with a USG of 5 per cent 5%  driven by skin care and health & wellbeing. However, turnover declined year-on-year due to transitory impact of GST rate rationalisation, the company said.   Personal Care turnover growth was flat, impacted by GST rate transition in the quarter, with quarterly sales reported at Rs 2,425 crore as against Rs 2,411 crore a year earlier.  Oral Care witnessed a marginal decline, while Closeup delivered low-single digit growth.

Foods delivered 3% USG with low-single digit UVG. Beverages (Tea and Coffee) grew in double-digits. Consolidated sales of the segment were at Rs 3,869  crore vs Rs 3,803 in Q2 last year.  Early green shoots were observed through sustained UVG in Lifestyle Nutrition. However, turnover declined, driven by pricing actions taken in previous quarters to refine pack-price architecture., HUL said.

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