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Hindustan Unilever Q2FY26 standalone results – in-line with expectation; sales volume stood flat; EBIDTA margins came in better than expectation

ICICIdirect Research 24 Oct 2025 DISCLAIMER

Hindustan Unilever standalone revenues stood flat at Rs15,585cr; largely in-line with expectation of Rs15,686.5.
Quarter witnessed transitory impact of implementation of GST 2.0 resulting in the flat sales volume in the domestic business in Q1FY26.There was 2% impact of GST rate cut transition on overall sales volume growth.
Higher input prices and passing of GST rate cut benefits (effective for 40% of the portfolio) in terms of price cut Gross margins decreased by 106bps to 50.4%.
Despite flat sales and input cost inflation, the company managed to achieve better than expected EBIDTA margins at 22.9% by curtailing its ad-spends and other expenses.
Operating profit decreased by 2% to Rs3,563crore; Adjusted PAT decreased by 5%yoy to Rs2,478cr due to lower other income and higher interest cost.


Outlook
GST rate cut impact was on 40% of HUL’s domestic product portfolio. Around 40% of the portfolio deals with home care category grew in mid single digit volume growth, while rest of 20% portfolio (tea and skin care portfolio) registered high single digit revenue growth (mix of volume and value).
Hence management expects H2FY26 volume growth to be much better compared to H1; driven by 1) GST rate cut pushing demand 2) 60% of the portfolio growing in volumes and 3) benefit of low base.
EBIDTA margins will remain in the range of 22-23% in the near term. Post demerger of Ice cream EBIDTA margin will move up to 23-24%. Softening of raw material prices provides upside risk on margins.
View: We broadly maintain our earnings estimates for FY26E/27E. The stock is currently trading at 51.8 its FY27E EPS of Rs50.2. Currently we have Hold rating on the stock.

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