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Hindustan Unilever Ltd (HUL) ended FY26 on a good note, clocking an underlying volume growth of 6% for the three months through March (Q4FY26), a multi-quarter high, supported by steady demand across both rural and urban markets. The improvement is notable, with volume growth rising from 4% in Q3 after a muted Q2, when volumes were broadly flat. The company expects FY27 to be stronger than FY26, driven by portfolio shifts and channel transformation.
The durability of this recovery, however, will be tested in the coming quarters. The forecast of a weak monsoon amid an emerging El Niño is a risk, and the company's decision to raise prices by 2-5% to offset cost pressures may weigh on volume growth. The operating environment in the last quarter was also marked by higher crude and crude-linked input costs amid the conflict in West Asia.
Against this backdrop, investors are likely to focus on margin resilience. HUL, India's largest fast moving consumer goods (FMCG) company, expects consolidated Ebitda margin to remain within its guided range of 22.5–23.5%. It sees judicious balancing of pricing, savings, and media investments, neutralizing short-term impacts from the West Asia situation. Ebitda is earnings before interest, tax, depreciation and amortization. HUL’s Ebitda margin in FY26 came in at 23.4% versus nearly 24% in FY25.
“Higher prices of crude-based commodities with palm oil remaining inflationary despite lower-priced tea and robusta coffee could impact margins in Q1FY27,” said analysts from Nomura Financial Advisory and Securities (India) in a 29 April report. They note that HUL has taken small price hikes in tea, salt and detergents, which can help cushion the impact. However, this is unlikely to materially excite investors.
Given an 8-10% input cost inflation and HUL’s calibrated pricing increases (2-5%), Nuvama Institutional Equities has factored in near-term margin pressure and cut FY27/28 estimated earnings per share (EPS) by 3-2%, yielding a target price of ₹3,090, compared with ₹3,200 earlier.
The stock closed at ₹2,250.90 on Thursday and has rebounded from its 52-week low of ₹2,022.50 seen on 2 April, aided partly by already compressed valuations. The recent rally, however, could limit near-term upside after initial optimism around strong management commentary and Q4FY26 results. Indian markets were shut Friday due to a local holiday.
“The management sounded distinctly confident in managing the growth-margin trade-off amid elevated input cost volatility, signalling a clear departure from its historically cautious tone,” Jefferies India said in a note.
In Q4FY26, HUL reported consolidated underlying sales growth of 7% year-on-year, with broad-based gains across categories. Home care, beauty and wellbeing, personal care, and foods posted growth of 9%, 8%, 5% and 5%, respectively.
The home care segment posted high-single underlying volume growth, driven by strong performance in liquids within fabric wash, which continued its double-digit growth trajectory. Powders and bars also saw an improvement in momentum, while household care registered double-digit volume growth led by Vim liquid.
The beauty and wellbeing segment reported mid-single digit volume growth. Hair care saw double-digit growth led by volumes, while strength in premium skincare was partially offset by weaker performance in mass products.
On the other hand, the personal care segment saw low-single digit drop in volumes, implying sales growth was led by pricing. Here, oral care saw low-single digit growth, suggesting persistent sluggishness in the category.
However, despite the softer volume trends, Nuvama’s analysts said, "We expect Colgate Palmolive (India) to perform relatively better with 4-5% year-on-year growth in Q4FY26 (versus 2% year-on-year growth in Q4FY25) and sustained momentum in H1FY27.”
Pallavi Pengonda is a Senior Editor at Mint, where she leads the Mark to Market team. With over a decade of experience at the publication, she is the authority on breaking down complex financial reports and tracing how big economic shifts actually ripple through the business world. From deep-dives into the oil and gas sector to the latest trends in retail and tech, she covers giants like Reliance Industries and Hindustan Unilever with a sharp, analytical eye. <br><br>Her path to journalism was a bit of a pivot. After earning her Master’s degree in Finance from Mumbai’s Welingkar Institute, an internship at the DNA newspaper changed everything. An editor there gave her some classic advice: "You’ll learn a ton, even if the pay doesn’t match." She took the leap, spent three years at DNA, and never looked back. <br><br>When she isn’t decoding the stock market to help readers make smarter investment moves, Pallavi keeps things low-key. You’ll likely find her recharging over the weekend with a good book, heading out for a long walk, or spending time at her easel painting.
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