HUL hits 15-quarter high volume growth, but input costs trigger price hikes

MUMBAI: Hindustan Unilever Ltd’s (HUL) volume growth surged to a 15-quarter high of 6% in the January-March quarter, even as it flagged escalating input costs linked to the West Asia conflict and initiated selective price hikes.

India’s biggest fast-moving consumer goods company reported a 21.3% rise in net profit to ₹2,994 crore, and 7.6% growth in revenues to ₹16,351 crore in Q4. The results exclude the demerger of the Kwality Walls ice-cream business in 2025.

The performance beat Bloomberg consensus estimates of ₹2,612 crore in profit and ₹16,270 crore in revenue.

Earnings before interest, tax, depreciation and amortization (Ebitda) in the fourth quarter rose 6% to ₹3,841 crore, while margins edged down 50 basis points to 23.7%. The company expects FY27 to outperform FY26, with margins in the 22.5-23.5% range.

Growth for the maker of brands such as Lux and Lakmé was driven by premiumisation and improving urban demand, with higher-margin segments contributing disproportionately to the topline.

However, the company has begun taking price increases to offset rising input costs. “We are taking calibrated pricing action in the range of 2-5%,” chief financial officer Niranjan Gupta said in a post-earnings briefing on Thursday. “For consumers in the short term, we may see some rebalancing between volume and price growth.”

At the same time, Gupta pointed out that HUL’s product categories are relatively inelastic or face low elasticity, “given that we're talking about daily consumption essential categories”.

Chief executive officer and managing director Priya Nair said in a statement that increased geopolitical tensions have turned currency and commodities volatile, but added that the company was well-positioned to navigate the volatile environment.

The company said supply chains remain unaffected so far. “We are responding with strong operational discipline, leveraging our supply network to secure supplies. We have managed the production and supplies without any disruption so far, this quarter and oncoming quarter as well,” said Gupta.

“Growth was supported by mix improvement, with premium and value-added segments contributing disproportionately versus mass categories, indicating urban recovery and trading-up trends,” said Sandeep Abhange, research analyst, consumer and midcaps at LKP Securities.

Rural demand continues to outpace urban growth, though both are broadly moving in tandem, said Gupta.

For the full fiscal FY26, revenue grew 5% to ₹64,468 crore, and net profit was flat at at ₹10,652 crore. The board has also proposed a final dividend of ₹22 per share, subject to shareholder approval.

The company’s shares closed 2.6% lower at ₹2,254 apiece on the NSE on Thursday, compared to a 0.74% dip in the Nifty 50.

Cost pressures

Home Care is the most exposed to input cost pressure, with crude-linked raw materials such as packaging and surfactants shaping pricing decisions, followed by personal care and beauty, according to Gupta.

The company is responding through a mix of price increases and changes in pack structures. “We use a combination of both the put-down price as well as optimizing the fill levels,” said Gupta. Fill levels refer to adjustments in the quantity in each pack to manage pricing.

“When you look at price-point packs, there you go with more of a fill-level adjustment and packs which are not locked to a price point, there you go with the put down price,” Gupta added.

A price-point pack is a retail packaging strategy where a product is designed to sell at a specific, often psychologically anchored price of, for example, ₹5 or ₹10.

HUL is optimistic about demand despite forecasts of a weak monsoon amid an emerging El Niño, citing higher reservoir levels, increased minimum support prices for crops and a wider spread of rainfall as mitigating factors.

“So, at this point in time, we see balancing factors, and we don’t see a cause to worry about the demand moving forward,” Gupta said.

Segment growth

Home Care remained the growth driver in Q4, rising 9%, its fastest pace in 11 quarters, driven by double-digit rise in Fabric Wash and high single-digit gains in household care. Liquids maintained strong double-digit growth.

Beauty and wellbeing grew 8%, with hair care posting strong double-digit growth, while premium skin care and colour cosmetics offset weaker mass demand. Personal care rose 5%, supported by brands such as Dove and Lux, while oral care remained muted even as Closeup gained share.

The foods segment expanded 5%, with coffee maintaining double-digit growth and lifestyle nutrition supported by Horlicks and Boost. During the year, brands Vaseline and Sunsilk each surpassed ₹1,000 crore in annual sales, taking HUL’s tally of billion-rupee brands to 20.

In March, Reuters reported that the company implemented a global hiring freeze “at all levels” for at least three months amid geopolitical tensions. On India operations, Gupta said HUL “continue(s) to manage our resources as per requirement of the business.”