Hindustan Unilever reported a 15% growth in underlying sales for the September quarter, supported by a 7% increase in volume. However, EBITDA margins contracted by 140 basis points to 22.6% due to rising commodity costs. The company remains optimistic about FY27, aiming to maintain margins between 22% and 24% through strategic portfolio changes.
Hindustan Unilever (HUL) recorded strong volume-led growth in the quarter ended September 30, even as high commodity costs forced a dip in profit margins. The company saw underlying sales grow by 15%, with a 7% increase in volumes, signaling that consumer demand remains steady. However, the cost of raw materials has made it difficult to keep profit margins stable.
EBITDA margins for the quarter stood at 22.6%, a drop of 140 basis points compared to the same period last year. This highlights the pressure companies face when trying to balance market share with rising input prices. Rather than aggressively raising prices, which could deter shoppers, HUL appears to be prioritizing volume growth. The company reported a total turnover of Rs 18,071 crore for the quarter, with EBITDA rising 8% to Rs 4,089 crore.
Looking ahead, management remains focused on the mid-term trajectory. They have provided guidance that EBITDA margins should remain in the 22% to 24% bracket for the full fiscal year 2027. This outlook is supported by a planned transformation of its product portfolio and distribution network. By updating how brands are marketed and improving supply chain efficiency, the firm hopes to move toward better performance.
The consumer goods sector is particularly sensitive to fluctuations in the prices of commodities like palm oil and other crude-based derivatives. While volume growth is a positive sign for HUL, investors should closely monitor how the company balances this against the need for margin expansion. The reliance on volume to offset costs is a strategy that works well when commodity prices are stable or falling, but it remains a risk if input inflation continues to rise.
For investors, the key monitoring points will be the company’s ability to stabilize its profit margins as it navigates these costs in the coming quarters. Changes in raw material prices and their impact on consumer spending will be crucial to track as the fiscal year progresses.