Street bullish on HUL as prospects improve

Hindustan Unilever's (HUL's) consolidated revenue soared 5 per cent in the first quarter of financial year 2026 (Q1FY26), with volume growth of 4 per cent, led by rural recovery which contributed about 1/3 of portfolio along with some improvement in urban demand.

- DEVANGSHU DATTA

by rural recovery which contributed about 1/3 of portfolio along with some improvement in urban demand. Net sales grew 5.2 per cent year-on-year (YoY) to ₹16,320 crore in Q1. Total revenue rose 5 per cent Y-o-Y to ₹16,510 crore. The EBITDA was flat Y-o-Y at ₹3,720 crore, and adjusted PAT (profit after tax) fell by 4.5 per cent Y-o-Y to ₹2,530 crore while reported PAT was up 5.6 per cent YoY at ₹2,760 crore. Among business segments, home care revenue grew 2 per cent, beauty & wellness grew 10.7 per cent, personal care grew 6.5 per cent, and foods & refreshment (F&R) declined 4.3 per cent Y-o-Y.

The gross margin contracted 190 basis point (bp) Y-o-Y to 50.1 per cent. The EBITDA margin contracted 130bp Y-o-Y to 22.5 per cent. Management expects gross margin to improve sequentially. HUL also retains EBITDA margin guidance of 22-23 per cent. There was an exceptional item of ₹127 crore related to restructuring expenses and the reversal of an indemnification asset. The Q1 tax rate was lower.

Effective tax rate stood at 16.2 per cent in Q1FY26 due to a one-off deferred tax reversal and adjusting for this, the normalised rate is 26.4 per cent.