HUL Q4 Results: Revenue Grows 2% Amid Tepid Demand, Management Optimistic About Recovery
Hindustan Unilever Limited (HUL), India's leading FMCG company, has reported its financial results for the quarter ending March 2025, showing modest growth amid challenging market conditions. Despite urban demand headwinds, the company's leadership remains confident about a consumption revival in the coming quarters.
Financial Performance Highlights
For the fourth quarter of FY25, HUL posted total sales of ₹15,000 crore, representing a 2% year-on-year growth on a standalone basis. The company's revenue from operations grew slightly better at 2.4% year-on-year to reach ₹15,214 crore.
On the profitability front, HUL reported a net profit of ₹2,493 crore, marking a nearly 4% year-on-year increase. This performance comes against the backdrop of tepid demand in urban markets, which constitute a significant portion of the company's business.
Management Outlook: Consumption Revival in Sight
HUL's CEO & MD Rohit Jawa expressed optimism about an imminent demand recovery in the consumer goods sector, which has been grappling with slowdown, particularly in urban markets. According to Jawa, a combination of positive macroeconomic factors is expected to stimulate consumer spending on FMCG products.
"Macro factors are now turning to be in favour of consumption. This is a really good moment for the CPG (consumer packaged goods) industry," Jawa stated during the post-results briefing.
Key Growth Drivers Anticipated
The company highlighted several favorable factors that are likely to boost consumer spending power in the coming quarters:
- Projected normal monsoon, which typically supports rural consumption
- Tax relief benefits that will begin to take effect from the current financial year
- Declining food inflation, easing pressure on household budgets
- Softer crude oil prices, reducing input costs
- Lower interest rates, improving consumer sentiment
These factors are expected to translate into increased disposable incomes for consumers, potentially benefiting both rural and urban consumption patterns.
Outlook for FY26
The management expressed confidence that the first half of FY26 would likely outperform the second half of FY25. This outlook reflects the company's anticipation of improving market conditions as the positive macroeconomic factors begin to influence consumer behavior.
However, HUL remains cautious about potential indirect impacts from global trade tensions. Jawa noted, "We are generally very insulated as a company. We are a local for local business, and supply chains are reasonably resilient. If the overall (Indian) economy gets impacted, as it might by some degree, then we will also be a part of the same platform."
Market Response and Analyst Perspective
Despite the cautiously optimistic outlook from management, HUL's stock ended at ₹2,325 per share on the BSE, down by 4%. Analysts at Nuvama Institutional Equities attributed this decline to margin concerns, noting that HUL is now factoring in an EBITDA margin of 22-23%, down from its earlier stance of 23-24%.
Consumption Trends
As a company whose performance is widely regarded as a proxy for domestic consumption, HUL's results offer insights into broader consumer trends in India. The company noted that rural demand has remained relatively steady, while urban middle-class consumers have curtailed spending due to high inflation over the past few quarters.
This urban demand slowdown has been a significant factor weighing on the growth of the FMCG industry as a whole. However, with the anticipated improvement in macroeconomic conditions, the company expects this trend to reverse in the coming quarters.
For the maker of brands like Dove and Knorr, the combination of potentially increasing consumer disposable income and the company's strong market position could create favorable conditions for growth as the market recovers from its current subdued state.
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