Analyst Concall
Don't expect further hit on margins from GST rejig, says HUL
This story was originally published at 19:59 IST on 23 October 2025
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--HUL: Don't expect any further hit on margins after GST rate cut
--CONTEXT: Comments by HUL management in post-earnings concall with analysts
--HUL: Target for next few weeks is to restock products with sellers
--HUL: Seeing demand stable in urban, rural India for past few months
--HUL: See considerable opportunity to scale up body-cleansing products
By Shakshi Jain and Avishek Rakshit
MUMBAI – Fast moving consumer goods major Hindustan Unilever Ltd. does not expect any further impact on its margins due to the recent Goods and Services Tax cuts as its sales channels resorted to destocking leading to dampened volume uptake, a top company official said in a post-earnings conference call with analysts on Thursday. "Going forward, we don't expect further margin impact. We were coming in from GST transition... It's something which government has changed and there is no cost implications on us. So, we don't expect any margin implications coming in," said Ritesh Tiwari, executive director - finance & IT, and chief financial officer at HUL.
The transitory impact of the government's decision to cut taxes on packaged food and personal care products disrupted the company's trade channels and inventory pipeline in the September quarter, leading to flat underlying volume growth on year and a 4% decline in the profit after tax before exceptional items.
To pass on the taxation benefits to consumers, HUL had reduced prices or increased grammage across 1,200 stock keeping units in the September quarter. "We estimate that this quarter (Jul-Sept), we saw, overall at an aggregate HUL level, up to two percentage impact, largely volume, of the GST transition," Tiwari said.
Over the next few weeks, the company aims to channel its focus towards restoring inventory to normal levels. "As the prices will stabilise early next month in November, our focus will be to ensure that shelves are filling back, which is more easier in a modern trade and e-commerce...and this job takes a couple of months' time," the company management said.
HUL anticipates normalcy in sales and business operations to return in early November, paving the way for a gradual recovery.
The revision in GST rates initially resulted in postponement of orders by distributors and retailers in anticipation of receiving new stocks with updated prices while customers deferred their pantry buying. Meanwhile, online trade channels offered deep dicounting to liquidate their stocks, leading to an imbalance in trade channels.
On comsumer demand for FMCG products, the company said it is seeing stable trends across rural and urban India. Patchy urban demand has weighed on the business of FMCG companies in recent quarters, while rural India recorded relatively better traction. "Urban is growing, and so is rural growing. And we have used the word that we do see this now demand trends to be stable, which we are not seeing big ups and big downs when I look at moving annual total for the last 12 months' time. We've seen both urban and rural contributing," the management said.
BUSINESS PLANS
Under new Chief Executive Officer and Managing Director Priya Nair, HUL is eyeing volume-led profitable growth based on four key priorities. The company's strategy involves sharpening customer segmentation, transforming core brands for further modernisation, superior online brand discovery, and investing disproportionately to scale high-growth demand areas.
"This will be based on market readiness, consumer readiness, in the choices we will make of where we invest disproportionately for scale...just to take an example from the cleansing category. Today, the cleansing category in India is mostly a bars category. There's only 2% of the category, which is liquids and body wash liquids. There's a huge opportunity for us to develop these markets and to scale body cleansing liquids," Nair explained. She also sees nutrition and well-being as a future growth area for the company in India.
On Thursday, shares of the company ended at INR 2,601.60 on the National Stock Exchange, up 0.4% from the previous close. End
Edited by Avishek Dutta
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