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Hindustan Unilever Ltd (HUL) registered a muted performance for the July-September quarter (Q2FY26), as recent cuts to GST rates on essential categories created temporary trade disruptions, despite an increase in net profit. The FMCG major posted a 3.8% YoY rise in net profit to Rs. 2,694 crore, while revenue grew 1.5% to Rs. 16,388 crore.
India’s largest FMCG company said that while GST reforms are a positive step for long-term consumption, they temporarily weighed on sales this quarter. Almost 40% of HUL's portfolio, comprised of packaged foods and daily essentials, benefited from lower tax rates.
Distributors, however, held off on restocking to clear older inventory, and consumers delayed purchases in hopes of price adjustments.
The company’s new Managing Director and CEO, Priya Nair, said, “The latest GST reforms will eventually boost consumption and improve consumer sentiment. We saw short-term disruption as trade adjusted to the new pricing. Normal trading conditions should resume soon, paving the way for steady market recovery,” Nair said.
HUL’s earnings before interest, tax, depreciation, and amortisation (EBITDA) for the quarter stood at Rs. 3,563 crore, marking a 2.3% decline YoY, in line with estimates. The EBITDA margin contracted 60 basis points to 22.9%; however, this was still above market expectations of 22.5%.
The company reported flat volume growth that reflected cautious consumer behavior and inventory reshuffling post-GST reductions. HUL’s revenue stood at Rs. 15,585 crore, up 0.5%YoY.
A one-time gain of Rs. 273 crore arising from the resolution of historical tax matters between UK and Indian authorities also contributed to profit growth.
Following the results, HUL shares rose 1.5% to Rs. 2,630.50 a piece on the NSE. The Nifty 50 index was up 0.71% at 26,052.90 points, driven partly by gains in FMCG counters.
The company declared an interim dividend of Rs. 19 per share for the quarter. Analysts expect the impact of GST-related disruptions to fade in the coming months.
“HUL’s fundamentals remain strong, and with inflation moderating, we expect demand to pick up across urban and rural markets,” analysts at SMC Global said in a note.
With a resilient brand portfolio that includes Dove, Surf Excel, Knorr, and Kissan, HUL remains optimistic about long-term demand recovery. The management expects volume growth to rebound as consumer confidence improves and the effects of the GST rate cuts taper off in the December quarter.
