Hindustan Unilever Q1 Review: Volume-Led Recovery Gains Traction At HUL, Say Brokerages

Hindustan Unilever Ltd.'s first-quarter results have prompted brokerages to converge on a common theme: a volume-led recovery is taking shape, with signs of a broader demand revival and strategic execution beginning to pay off. The company's 4% underlying volume growth, ahead of consensus expectations, has been widely interpreted as a signal of improving fundamentals, especially in rural markets and key categories like home care and beauty.

In the first quarter of FY26, Hindustan Unilever reported a consolidated revenue of Rs 15,689 crore, marking a 5.2% year-on-year increase. The company achieved an underlying volume growth of 4%, surpassing the consensus estimate of around 3%.

However, profitability metrics saw some pressure, with gross margin contracting by 188 basis points year-on-year to 49.4%, and Ebitda margin declining by 134 basis points to 22.8%. Segment-wise, Home Care revenue rose 1.9% to Rs 5,783 crore, Personal Care grew 6.5% to Rs 2,541 crore, Beauty & Wellbeing increased 4.7% to Rs 3,349 crore, and Foods saw a 4.3% rise to Rs 4,016 crore.

Macquarie On HUL

Macquarie maintained its ‘Outperform' rating, highlighting the strength of HUL's volume recovery: “HUVR's 1Q volume growth, at 4%, was slightly better than estimated, as healthy volume growth across home care, tea, and skin care offset a volume decline for soaps.”

The brokerage was particularly upbeat about HUL's brand revitalisation efforts: “We liked the broad-based recovery in volume momentum on the back of HUVR's initiatives with skincare to revitalise the Glow and Lovely brands and with tea to be price competitive.”

It also noted the strength of the digital-first portfolio and said, “Strong growth in the acquired Oziva and Minimalist portfolios is encouraging… The transient nature of gross margin weakness should reverse as high-cost inventory pressures abate.”

However, Macquarie flagged concerns, stating, “We are concerned about the continued decline of the nutrition drinks portfolio… and growth headwinds for the hygiene soaps segment, particularly the Lifebuoy brand.”

Morgan Stanley On HUL

Morgan Stanley said demand improved sequentially, with rural growth ahead of urban… growth was led by small cities and e-commerce channels.”

The brokerage emphasised HUL's evolving channel strategy and said, “Organised trade (including e-comm) grew in double digits, with 2x growth in q-comm.”

On profitability, it noted that management expects sequential improvement in gross margin, aided by narrowing the price versus cost gap and a favourable mix.

Morgan Stanley also highlighted the shift in Beauty & Wellbeing and said, “HUL's disproportionate B&W investments may dilute margins in the medium term, but this strategy with accelerated growth is accretive to overall company margins."

UBS On HUL

UBS said that the volume growth of 4% now reinforces volume growth revival in H2FY26… "HUL's own portfolio-level initiatives to spur growth are beginning to show results," it said.

The brokerage further noted that gross margin contraction was driven largely by HUL's quest for keeping the consumer value proposition intact, especially in the home care segment—"a "sensible strategy in our view.”

On digital brands the brokerage said, Minimalist is now being extended from skincare to hair care and body wash… "HUL sees synergies in R&D and supply chain and plans to extend the portfolio internationally.”

UBS has raised the target price to Rs 3,000 and said, “We raise the valuation multiple to reflect better-than-expected growth… risk-reward is becoming very favourable.”