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Informist, Monday, Feb. 9, 2026

 

By Anshul Choudhary

 

MUMBAI – Hindustan Unilever Ltd. is expected to report a slight increase in revenue growth for the December quarter as the hit to sales from destocking, triggered by the cuts in Goods and Service Tax, were largely limited to October. However, the destocking still affected earnings growth as the improvement in demand in the remaining two months was not enough to fully absorb the hit due to GST cuts.

 

The company's consolidated net profit for the quarter is seen at INR 25.56 billion, according to an average of estimates from 12 brokerages. This would translate into a rise of nearly 3% on year--similar to the rise in the September quarter but sharply lower than the 19% growth in the year-ago quarter. Its net profit growth likely slowed down from the previous year as the incremental benefit of price hikes in the soap business was not available and as the hikes were effected in the base quarter.

 

The highest estimate for net profit is INR 26.40 billion from Elara Securities Pvt. Ltd. The lowest estimate is INR 24.56 billion from Systematix Shares and Stocks (India) Ltd., which expects higher expenses due to GST-related incentives and inflation in palm oil to hit profits. The company is set to report its quarterly earnings Thursday.

 

The government had lowered GST on several products in September. Post the cuts, distributors and retailers deferred their purchases as they wanted to first sell the products on which the older GST rates applied. The cuts in GST affected 40% of the company's portfolio and the company was forced to offer discounts to clear inventory, which hit profits.

 

The company's consolidated revenue for the quarter is expected to rise to INR 161.56 billion, according to the average of estimates. This would translate into a year-on-year rise of nearly 5%--the best growth figure in 10 quarters. The company's revenue growth improved slightly on better demand from rural areas and due to the limited impact of the GST cut on destocking, brokerages said.

 

The highest estimate for revenue is over INR 168 billion from YES Securities Ltd., which also has the highest estimate for volume growth at 4.5%. The lowest estimate is INR 155 billion from Kotak Securities Ltd., which expects slower volume growth of 2%.

 

The final growth figures for net profit and revenue are likely to be slightly different as the company will report quarterly earnings without the ice-cream business, which was demerged in December. The company's reported net profit figure may show a sharp rise as it is likely to include the one-time fair gain on account of the demerger of the ice-cream business, Nuvama Wealth Management said.

 

Demand for daily-use products has not risen sharply after the GST cuts and the improvement is rather gradual, brokerages said. Demand from urban areas remained weak during the quarter, while growth in rural demand continues to outpace growth in urban demand. HUL is likely to report volume growth of 2.0-4.5%, better than the flat growth reported in the trailing quarter and the year-ago quarter, according to estimates from six brokerages.

 

The company had said the demerger of the ice-cream business may boost margins by 50-60 basis points as the ice-cream business margin was lower than the company-level margin. Sequentially, the company is likely to see the benefit of the demerger and brokerages expect the EBITDA margin to improve 11-40 bps in the December quarter, according to estimates from five brokerages. However, the margin gains from the demerger of the ice-cream business were likely not enough to offset the impact of trade disruptions due to the cuts in the GST. The EBITDA margin is either likely to rise only marginally on year or decline up to 40 bps, estimates showed.

 

"(Margin) impacted YoY with cumulative inflation in palm oil (impacting soaps, cosmetics) and due to GST-related costs," Systematix said. The company's EBITDA margin in the year-ago quarter was 23.5%.

 

The company's shares have not performed well for around three years as growth has been weak with single-digit growth in sales during this time. The stock has fallen over 4% in three years as compared with the 45% rise in the Nifty 50 index. The stock is down nearly 2% since the company reported its September quarter earnings. Monday, it closed at INR 2,435 on the National Stock Exchange, up slightly from Friday.

 

Of the 14 brokerage reports on the company available with Informist, 11 have a 'buy' or equivalent recommendation with an average target price of INR 2,906, which is 19% higher than the current market price. The remaining three have a 'hold' recommendation with an average target price of INR 2,590, more than 6?ove the current level.

 

Following are the December quarter earnings estimates for Hindustan Unilever from 12 brokerage firms in descending order of the estimate of net profit in INR billion:

 

Brokerage Name	Net Sales	Net Profit	EBITDA
Elara Securities (India) Pvt Ltd	164.44	26.40	38.01
YES Securities (India) Ltd	168.04	26.08	38.65
Prabhudas Lilladher Pvt Ltd	162.17	25.96	37.46
Emkay Global Financial Services Ltd	162.75	25.80	38.40
Motilal Oswal Financial Services Ltd	160.96	25.70	37.39
Mirae Asset Sharekhan Ltd	159.09	25.65	-
Nomura Equity Research	164.48	25.63	38.04
Kotak Securities Ltd	154.98	25.28	35.98
JM Financial Institutional Securities Pvt Ltd	160.53	25.23	37.45
Nuvama Wealth Management Ltd	159.33	25.22	37.07
Nirmal Bang Equities Pvt Ltd	161.01	25.19	36.23
Systematix Shares and Stocks (India) Ltd	160.98	24.56	37.07
Average	161.56	25.56	37.43

 

End

 

Edited by Ashish Shirke

 

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