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Informist, Thursday, Feb. 12, 2026

 

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--HUL: Rural demand picking up faster than urban demand 
--CONTEXT: Comments by HUL mgmt in post-earnings call with newswires 
--HUL: Q3 more of a normalised quarter in terms of impact from GST cut 
--HUL: Advertising expenditure fell YoY in Q3, but was stable in Apr-Dec 
--HUL: Discounting trend in Q3 stable, did not change materially 
--HUL: Won't see any more incremental impact due to labour code-induced costs 
--HUL: To hike prices in homecare portfolio soon 
--HUL: Evaluating plans to bring brands from Unilever portfolio into India 

 

NEW DELHI – Hindustan Unilever Ltd. said even though its advertising and promotional expenditure in the December quarter fell on year, it rose as a proportion of revenue in absolute terms. "We'll continue to step up the ANP (advertising and promotional costs) to fund our bigger, fewer bigger bets," Chief Financial Officer Niranjan Gupta told reporters in a post-earnings call for newswires Thursday.

 

The company incurred INR 13.84 billion towards advertising and promotion in the December quarter, down 4% on year and almost 8% on quarter. In the year-ago quarter, this expense had dropped a little over 9% on year to INR 14.45 billion. 

 

"In fact, when you look at an absolute basis, over nine months, it's a step-up by almost close to Rs 200 crores (INR 2 billion, at consolidated levels)," Gupta said. "If you look at the nine months, the nine-month ANP is 10% of revenue for this year, as well as for the prior year," he added. In Apr-Dec, the fast-moving consumer goods major incurred INR 43.80 billion towards the item, down around 2% on year. On a consolidated basis, the company spent INR 47.52 billion on advertising and promotion in the same period, up 4% on year.

"ANP should be looked at more from a YTD (year-to-date) perspective, a longer horizon. Between each quarter, phasing happens because of activities, launches, where you want to dial up more and where you want to dial up less," Gupta said. 

 

Gupta expects demand for consumer goods to grow going forward after seeing a steady improvement in the December quarter. "Our broad-based growth in the current quarter reflects the gradual momentum across our portfolio. Coupled with a positive operating environment, we expect growth in FY27 to be better than FY26," Gupta said. 

 

"Growth will remain our number one priority. We will continue to invest in the business as needed to support sustained growth, and hence, we expect our EBITDA (earnings before interest, tax, depreciation, and amortisation) margins to stay around the current guided range," Gupta said. HUL's management had guided for an EBITDA margin range of 22-23% for 2025-26 (Apr-Mar).

 

For the December quarter, the company reported a bottom line of INR 124.97 billion on revenue of INR 462.42 billion. 

 

HUL saw underlying demand for FMCG goods improve steadily during the December quarter as headline inflation softened, especially in food items. This, coupled with favourable macroeconomic conditions, helped the company book broad-based growth across segments, Gupta said. "We are seeing both urban and rural demand actually picking up. Of course, between them, we see rural demand actually picking up faster than urban demand," he said.

 

Around 40% of the company's portfolio was impacted because of the cut in the goods and services tax, effective on Sept. 22. This was because of factors such as channel destocking, delayed pantry buying, and trade support provided to dealers by the company. "By early November, all these transitions had normalised. So actually, you can assume the December quarter numbers as more of a normalised quarter," Gupta said. 

 

The benefits of the GST cut for the FMCG sector are more long-term in nature, according to Gupta. Policy changes such as these can lead to increased preference for organised trade and not unorganised trade as goods become more affordable. Additionally, premiumisation, too, gets a fillip as these goods get more affordable. "It (has) more of a prolonged, longer period of positive impact on the consumption sentiment, which then pans out into the operating environment," Gupta said.

 

While headline inflation has trended lower, input costs for non-feedstock items in the home care business have gone up. "We continue to evaluate the cost dynamics and the cost trends. And therefore, we continue to take calibrated price increases," Gupta said. The company has already taken some price increases in the home care segment, and may take more hikes going ahead to offset input cost pressures. 

 

Meanwhile, HUL saw stable discounting levels in the December quarter. The trend in discounting did not change materially enough to have an impact on HUL's bottom line or top line, Gupta said.  

 

When it comes to trade channels, the company has seen quick commerce emerge as its fastest growing channel. "We set up a dedicated organisation, and deployed advanced supply chain capabilities, which will allow us to lead growth in this channel," Gupta said. Nearly 3% of HUL's revenues come from goods sold through quick commerce platforms. The company expects this growth to continue, but did not quantify its expectations.

 

HUL is doubling down on fewer, bigger bets in a bid to scale up its brands during the December quarter, Gupta said. "For example, we have scaled up our D2C (direct-to-consumer) business, led by Oziva and Minimalist. Both these brands together now have an annual revenue run rate of Rs 1,100 crores (INR 11 billion)," Gupta said, adding that it was attempting to unlock new demand spaces with the launch of the Master brand in the chutney category through its Kissan brand.

 

HUL said it continues to evaluate possibilities of bringing brands from its parent firm Unilever Plc.'s portfolio, which will help it improve existing brands, create new categories for boosting demand, and develop brands locally through technology developed by the latter. 

 

"Unilever, of course, in its portfolio has got a lot of brands. The timing needs to be right in which segment you bring (the brands) in," Gupta said. "The price point for India has to be right. That's a part of our continuous evaluation that we'll keep doing." At 1347 IST, shares of HUL traded 1.7% lower at INR 2,420 on the National Stock Exchange.  End

 

Edited by Tanima Banerjee

 

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