Hindustan Unilever Ltd (HUL) is sharpening its growth strategy as it seeks to revive performance after two years of subdued revenue growth.
At its Capital Markets Day 2026, held on Friday, the consumer goods major laid out its ‘winning in new India’ strategy against the backdrop of structural shifts in the FMCG sector, with a focus on distinct growth pockets that can eventually deliver volume-led revenue and profit growth.
HUL plans to leverage its portfolio to unlock this growth. It sees 40% of incremental growth coming from consumption and premiumization, another 40% from market-making by adding new users, and the remaining 20% from entering new spaces.
What HUL did not provide was a quantification of the potential growth improvement or a timeline for achieving it. That lack of clearer guidance could limit the boost to investor sentiment, particularly as revenue growth has remained subdued. Turnover excluding the ice cream business grew at just 4% CAGR over FY24-FY26.
HUL has taken five key steps over the past year to reset the business for stronger growth. These include elevating brand desire through its SASSY (science, aesthetics, sensorial, said-by-others and youthful) framework; sharper resource allocation; accelerating key growth pockets across geographies, channels and portfolios; stepping up execution; and rewiring the operating model to improve agility.
The company believes these efforts have already improved performance in recent quarters. Underlying sales growth rose to 10% in the June quarter (Q1FY27), from 7% in Q4FY26 and 5% in Q3FY26, compared with 3% in the first half of FY26.
Innovation, premiumization and cost savings led margin outlook is positive for long-term, said a PL Capital report on 7 September, adding, “We believe competitive intensity is likely to remain elevated in home care and toilet soaps; however, the company's initiatives in beauty & wellbeing and nutrition are expected to offset this pressure.”
HUL has widened its medium-term Ebitda margin guidance to 22-24% from 22.5%-23.5% earlier, aided by better product mix, as it shapes the portfolio structurally toward higher-margin products. The lower end of the margin guidance has dropped to 22%, while the broader 22-24% range allows flexibility to invest in growth. HUL expects growth in the gross-margin-accretive portfolio at 1.5x the rest of the portfolio.
To support growth and productivity, HUL also plans to increase capital expenditure. Capex intensity is expected to rise to about 3% of sales from around 2% historically, with more than 85% directed towards growth and savings initiatives, compared with 75% earlier.
Investors want proof
Still, investors remain cautious.
“What remains to be seen is the execution, consumer acceptance and the time taken to uplift the growth – the only area the company pulled back from sharing any guidance,” said a Nomura Research report dated 5 September. The absence of the previously indicated double-digit earnings-per-share (EPS) growth guidance was also notable, it said.
Amid a broader de-rating of FMCG stocks, HUL shares are hovering near their 52-week low of ₹1,950.40 apiece, hit on 4 September. “Higher inflation and El Nino led pressures can weigh on growth and margin outlook in near term,” said PL Capital.
The stock trades at almost 41x FY27 estimated EPS, according to Bloomberg consensus. That valuation looks demanding given the near-term margin risks. Investors will also closely watch whether the recent improvement in volume and sales growth can be sustained.