HINDUNILVR

’s Rural Growth Outpaces Urban, Focus Shifts to Bigger Bets

(HUL) reported Q3FY26 revenues of ₹16,235 crore, up 6% YoY, broadly in line with estimates. Underlying volumes grew 4% YoY, marking a recovery from flat growth in the prior quarter. Profit before exceptional items rose 1% YoY to ₹2,562 crore, while reported profit surged on a one-time gain from the Kwality Wall’s spinoff. Margins narrowed due to higher expenses and labour code provisions, but management remains optimistic about FY27 growth, supported by premiumization, direct-to-consumer initiatives, and quick commerce. Financial & Operating Performance - Revenue: ₹16,235 crore, +6% YoY (vs consensus ₹16,156 crore). - Underlying volume growth: +4% YoY, vs flat in Q2FY26. - PAT (before exceptionals): ₹2,562 crore, +1% YoY. - Reported PAT: ₹6,603 crore, +121% YoY (Kwality Wall’s spinoff gain). - EBITDA margin: 23.3%, down 70 bps YoY. - Expenses: +6.3% YoY, driven by labour code-related employee costs. Segmental Highlights - Beauty & Wellbeing: +6% sales growth, low-single-digit volume growth. - Home Care: +3% sales growth, mid-single-digit volume growth, impacted by pricing actions. - Hair Care: Double-digit volume-led growth. - Skin Care: Strong winter portfolio performance; non-winter subdued. - Health & Wellbeing: High double-digit growth. - Personal Care: +6% sales growth. Strategic Focus - Rural demand outpaced urban, both showing stable growth. - GST cuts provided only short-term consumption boost; long-term benefits expected. - D2C and quick commerce highlighted as structural growth drivers. - Oziva (~₹500 crore ARR) and Minimalist combined (~₹1,100 crore ARR) strengthening Health & Wellbeing portfolio. - HUL acquired remaining 49% stake in Oziva for ₹824 crore. - Quick commerce contributes ~3% of overall sales. Valuation & Outlook - Margin pressures from competition and labour costs remain near-term risks. - Management expects FY27 growth to be stronger than FY26, aided by premiumization, wellness, and digital channels.