HINDUNILVR - Hindustan Unilever Ltd. Share Price

Management anticipates continued moderation in demand due to macroeconomic factors like real wage growth, food inflation, and employment levels. Urban demand remains subdued, while rural recovery is gradual. Consumers are temporarily shifting to smaller packs, but premiumization trends persist. HUL aims to drive competitive volume-led growth by prioritizing investments in core, future core, and market-maker portfolios.

Commodity prices (crude palm oil, tea) are volatile; if stable, low single-digit pricing growth is expected. EBITDA margins are projected at the lower end of 23"“24%, managed via productivity programs and price-value balance. Strategic moves include acquiring Minimalist (a premium D2C beauty brand) to strengthen masstige positioning, divesting Pureit, and demerging Ice Cream for operational focus.

Key segment performance: Home Care led growth (6% USG) via fabric wash and dishwash. Beauty & Wellbeing grew modestly (1%) impacted by delayed winter, though non-winter and premium segments performed well. Personal Care declined (-4%) due to hygiene segment challenges, while Foods stabilized with premium tea and coffee growth. Margins across segments remained healthy. Outlook emphasizes agility in portfolio transformation and market share gains amid evolving consumer trends.

Major Questions and Summarized Answers:

1. What are the expectations from the Minimalist acquisition, and how does it address pricing/product gaps?
The acquisition aligns with HUL's strategy to strengthen its premium beauty portfolio. Minimalist, a digital-first, science-backed brand, addresses the masstige segment (mid-tier pricing) in actives-led skincare, a high-growth area. HUL plans to leverage its distribution network to scale Minimalist offline, optimize supply chain efficiencies, and expand internationally. The brand's profitability from inception reflects disciplined cost management, and synergies with HUL's R&D and global reach are expected to enhance growth without compromising agility.

2. How are Personal Care and Foods segments maintaining margins despite inflation?
Personal Care margins (17"“18%) and Foods margins (19"“20%) remain healthy due to strategic pricing, gross margin management, and balanced investments in brand-building. Savings from productivity programs and calibrated pricing actions offset inflationary pressures. Focus on premiumization (e.g., Dove, Knorr) and portfolio optimization in high-growth categories (e.g., sauces, ketchups) also contributed to stable margins.

3. Why did UVG (Underlying Volume Growth) turn negative despite absolute tonnage growth?
Negative mix arose from higher growth in low-realization segments (Home Care) and consumer shift to smaller packs amid macroeconomic pressures. Premiumization trends partially offset this. HUL expects the mix impact to normalize as premiumization resumes dominance, reflecting resilient long-term demand for upgraded products despite near-term consumption titration.

4. What interventions are planned for Horlicks to revive growth?
HUL aims to improve large-pack adoption through revised price architecture and enhance core product appeal via taste innovation. Market share and penetration remain stable, but urban discretionary spending pressures impacted consumption. Focus on strengthening core offerings and incentivizing usage in target households is prioritized to drive volume recovery.

5. How will the Ice Cream demerger impact shareholders?
Shareholders will receive 1 equity share of the demerged entity (Kwality Walls India) for each HUL share held. The separation allows focused management and strategic agility for the ice cream business, leveraging its high-growth potential. The transaction is expected to unlock value, with listing enabling direct shareholder participation in future growth.

6. What macro factors could improve FMCG demand trends?
Recovery hinges on real wage growth, moderating food inflation, and employment improvements. Near-term demand remains subdued, but rural recovery (supported by crop outcomes) and stabilizing commodity prices (e.g., palm oil, tea) are positive indicators. HUL anticipates gradual normalization of urban consumption and pack-size trends as macro conditions stabilize.

7. How is HUL addressing mix challenges in Beauty & Wellbeing?
Delayed winter impacted skin care, but non-winter portfolios and premium segments (e.g., serums, sunscreens) grew mid-single digits. Glow & Lovely's relaunch targets rural penetration, while Minimalist acquisition and premium innovations (e.g., Dove scalp therapy) aim to accelerate mix improvement. Margin dilution is expected as HUL prioritizes growth investments in premium categories.

8. What differentiates Minimalist's profitability compared to typical D2C brands?
Minimalist's profitability stems from efficient P&L management, targeted innovations, and low customer acquisition costs via digital channels. HUL will preserve its agile "speedboat" model while integrating supply chain and distribution synergies. The founders' continued involvement ensures brand ethos retention, with scalability through HUL's offline network and R&D capabilities.

9. How is HUL managing the formulation transition for Lux and Lifebuoy?
Stratos formulation rollout for Lux and Lifebuoy is nearly complete, with positive market share trends. Lifebuoy's relaunch focuses on modernizing hygiene positioning through product upgrades and communication. HUL is confident in the formulation's performance, citing robust testing and gradual consumer acceptance despite temporary portfolio overlaps in trade channels.

10. What is the outlook for Home Care volume growth sustainability?
Home Care's resilience stems from essential consumption, premiumization (e.g., Surf Excel liquids), and affordability (e.g., Rs.10 sachets). Volume growth is expected to sustain due to category maturity and innovation (e.g., Vim surface cleaners). Limited pack-size titration in Home Care compared to discretionary categories supports stable mix, with rural recovery providing incremental tailwinds.