Hindustan Unilever looks to stronger FY27, but commodity inflation threatens to squeeze margins

Hindustan Unilever expects commodity inflation to persist in the near term, keeping pressure on margins, even as India's largest consumer goods company sees FY27 outperforming FY26 on the back of portfolio and channel transformation.

The outlook comes as the West Asia war creates a wave of input-cost inflation across India's fast-moving consumer goods (FMCG) sector, with higher crude-linked derivatives, packaging costs and edible oil prices threatening to erode margins even as demand holds up.

Also Read: HUL Q2 Results: Net profit rises 4% YoY to Rs 2,790 crore; Rs 19/share dividend declared


Companies have been raising prices and tightening costs to cushion the blow, but passing on the full increase risks hurting consumption, particularly in price-sensitive categories. The pressure is expected to persist into the second half of FY27, leaving companies to balance growth against profitability.

The consumer goods maker said consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) margin would remain within its guided range of 22-24%. Its EBITDA margin stood at 22.6% in the September quarter, a fall of 140 basis points as compared to last year. The company's underlying sales growth reached a 14-quarter high.

"Commodity inflation expected to continue in the short-term," HUL said in its mid-term outlook, while reiterating its expectation that FY27 would be better than FY26, driven by portfolio and channel transformation.

The firm reported turnover of Rs 18,071 crore for the quarter ended September 30, with underlying sales growth of 15% and underlying volume growth of 7%. EBITDA rose 8% year-on-year to Rs 4,089 crore.

The results come as as India’s festival season, a bumper opportunity for FMCG companies to lift their sales, is underway.

Profit growth holds up despite cost pressures

Profit after tax before exceptional items rose 9%, reflecting Hindustan Unilever's focus on volume-led and competitive growth. It reported flat profit after tax of Rs 2,796 crore. The year-ago quarter included one-off tax related gains of Rs 273 crore.

Also Read: Changing user habits to drive HUL's next growth cycle: MD Priya Nair

Priya Nair, CEO and managing director of HUL, said, “In September quarter, we delivered 15% Underlying Sales Growth, our highest in the last 14 quarters, with Turnover of ₹18,071 crores. Underlying Volume Growth was strong at 7% reflecting sustained momentum driven by our focus on crafting desirable brands and strengthening future-fit Go-to-Market.”

She added, “Indian economy remains resilient, with healthy macro indicators supporting a positive consumption environment. We continue to invest in building longterm capabilities and remain anchored to the ‘Winning in New India’ strategy of delivering competitive, volume-led profit growth.”

Home Care, Beauty & Wellbeing lead growth

Home Care reported underlying sales growth of 22%, led by double-digit volume growth across fabric wash and household care. Both categories delivered broad-based growth across formats and brands, while liquids continued to record strong double-digit growth.

The Beauty & Wellbeing segment recorded underlying sales rising by 16%, on the back of double-digit volume growth. Hair Care reported broad-based gains, while Skin Care and Colour Cosmetics further posted double-digit growth. Premium products, innovations continued to remain key contributors to this segment. It reported revenue of Rs 4,319 crore and a 29% margin.

Also Read: HUL bets on cost cuts, brand push to revive its growth: MD

Another double-digit growth in skin cleansing helped HUL's Personal Care business deliver underlying sales rise of 9%. The company attributed this to market focussed development initiatives for Pears and Dove soap bars. Oral Care reported low-single-digit growth. This segment reported revenue of Rs 2,617 crore for the quarter.

The company's Foods business reported underlying sales growth of 9% and low-single-digit volume rise. Packaged Foods delivered growth, while Lifestyle Nutrition related brands sustained their double-digit growth momentum. Coffee business also grew on the back of volumes, although inflation related headwinds weighed on performance in the tea business, especially in the mass market segment.

First-half performance remains resilient

For the first half of FY27, HUL reported turnover of Rs 35,255 crore, with underlying sales growth of 12% and underlying volume growth of 6%. EBITDA grew 8%, while profit after tax before exceptional items rose 9%.

The board declared an interim dividend of Rs 19 per share for the financial year ending March 31, 2027.