Hindustan Unilever Ltd. is sharpening its focus on growth and profitability, with double-digit earnings-per-share growth firmly on the radar over the medium to long term.
Chief Financial Officer Ritesh Tiwari laid out the FMCG major's multi-pronged strategy, with increased investments, capital discipline and premiumisation at its core.
"With inflation easing and headline commodities coming down, the macro environment has become more supportive," he said in an exclusive interview with NDTV Profit on Friday. "We expect the first half of FY26 to be better than the same period last year."
Organised Trade
One of the biggest shifts HUL is tracking is the faster growth of organised trade over unorganised retail. With consumers increasingly shopping through modern channels and e-commerce, HUL is stepping up its presence in quick commerce and modern trade.
"Quick commerce is growing rapidly. We are increasing our assortment and investments in these channels as they become more integral to the consumer's journey," Tiwari said.
This includes doubling down on its distribution strategy and enhancing in-store visibility to stay ahead of the curve.
Beauty And Well-being
The beauty and well-being segment is at the heart of HUL's future strategy. The company expects a 900-basis-point growth in premium beauty products, fuelled by new launches, introducing products from global parent portfolios that align with the Indian population, and targeted acquisitions.
"There is massive product transformation underway. We are launching brands where we see demand and also bringing in successful products from our global portfolio that can work in India," Tiwari said.
The company also sees bolt-on acquisitions as a key growth lever in the beauty and food categories, helping expand its footprint in high-growth segments.
Capital Allocation
HUL's capital strategy is clear and sequenced. The first priority is business growth, followed by strategic acquisitions, and finally, returns to shareholders through dividends. To support this, capex will rise to 3% of turnover, up from 2%, with all investments funded through internal accruals.
"Now is the right time to double down on investments. We're also dialing up our customer service efforts, which will require fresh capital deployment," Tiwari added.
Rural Recovery
Tiwari acknowledged that rural demand is undergoing a drastic transformation, and HUL is adapting its product portfolio and pricing accordingly. Volume-led growth will be the focus, with low single-digit pricing growth expected.
The company aims to outpace the market by 100 bps and is targeting modest margin improvement over the longer term.
Financial Discipline
HUL remains committed to maintaining robust financial metrics. The company is targeting a ROCE above 100% and expects a 100–200 bps improvement in ROE, underpinned by efficient capital utilisation and strong operating leverage.
Ice Cream Business
In a major structural move, HUL will demerge and list its ice cream business, describing it as a high-growth, high-capex, low-margin vertical. The demerger will be done at a 1:1 shareholding ratio.
"We will continue investing in the ice cream business even post-demerger," Tiwari said.
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