HUL To Pass On GST Benefits Via Competitive Pricing; Sees Near-Flat Q2

Fast-Moving Consumer Goods giant Hindustan Unilever Ltd. (HUL) on Friday said it will ensure that the benefits from the Government’s latest Goods and Services Tax (GST) revisions are directly passed on to consumers by offering more competitive pricing across a wide range of products.

From Sept. 22, around 40% of HUL’s portfolio — including toilet soap, toothpaste, shampoo, hair oil, talcum powder, lifestyle nutrition and select food categories — will attract a reduced GST rate of 5%, down from the earlier 12% or 18%. The company said the move is aimed at enhancing value for consumers, supporting the government’s effort to boost consumption, and strengthening long-term demand.

“These reforms are expected to increase disposable income and drive long-term demand across key categories. We are committed to ensuring that these benefits reach consumers in the form of competitive prices and greater value,” HUL said in its update.

The transition, however, has caused short-term disruption across trade channels, with distributors and retailers deferring orders to clear existing stocks at old prices. Consumers, too, postponed pantry purchases in anticipation of lower-priced goods. This has resulted in softer sales in September, with the impact likely to extend into October.

On account of these temporary factors, HUL expects consolidated business growth to be near flat to low single digit for the quarter ending September 2025. The company stressed that this is a transitory effect and projected recovery from November onwards, supported by stabilising prices, higher disposable incomes and its portfolio transformation initiatives.

With a reduction in GST rates on almost all food items and select essential personal care categories to 5% from 12% or 18%, the measure could partially revive consumption and improve the growth construct, said Amit Agarwal, senior vice-president for Fundamental Research at Kotak Securities.

A good monsoon, tax cuts, interest rate cut and the benefits to the bottom end of the pyramid by state and central government in terms of direct cash benefits, are likely to help further aid household finances.