Now Reading: HUL shares drop 7% as profit falls 3% despite sales surge
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HUL shares drop 7% as profit falls 3% despite sales surge
Hindustan Unilever Ltd (HUL) shares fell 6.99% to ₹2,022.70 on Tuesday after the company reported a 3% drop in attributable profit to ₹2,673 crore for the June quarter, despite turnover rising to…
The Story in Brief
Hindustan Unilever Ltd (HUL) shares fell 6.99% to ₹2,022.70 on Tuesday after the company reported a 3% drop in attributable profit to ₹2,673 crore for the June quarter, despite turnover rising to ₹17,184 crore. The reported decline reflected a one-off tax credit in the year-ago period; profit before exceptional items grew 9% to ₹2,731 crore. Underlying sales growth hit 10%, the strongest in 13 quarters, with 5% volume growth.
Management increased prices by 5% but passed on only half the inflation absorbed. EBITDA margin contracted 40 bps to 23%. Home Care delivered 14% sales growth, Beauty & Wellbeing 12%, while Personal Care lagged at 4%. HUL plans ₹2,000 crore capex over two years, focusing on premium categories, automation and quick-commerce. The company expects FY27 to be stronger than FY26, but investors remain worried about margin pressure from rising input costs.
The Indian Opinion
The market is punishing HUL for doing what every company says it wants: volume-led growth. The 10% underlying sales growth is genuine, but the 40 bps EBITDA margin squeeze has investors in a panic about inflation. The one-off tax credit clouding the profit comparison is barely discussed. The real test is whether premiumisation in Beauty & Wellbeing and Home Care can absorb another 2-5% sequential input-cost rise in the September quarter without crushing margins further. One number to watch: the mass soap volume decline versus premium liquid growth.
Source: thehindubusinessline.com
This story was synthesised by AI from the source linked above.
