HUL’s Q4 Results Review: Analysts View Margin Guidance Cut As Part Of Aggressive Growth Agenda

Hindustan Unilever Ltd. revised its near-term operating margin guidance after announcing its fourth quarter earnings were announced. Brokerages, from Goldman Sachs to Nirmal Bang, view this shift as a clear intent to stimulate growth, albeit at the cost of near-term margin compression.

The FMCG major's earnings for the March quarter came in line with consensus estimates by Bloomberg. It revised its near-term operating margin guidance to 22–23%, down from 23–24%, as it plans to step up marketing spends and double down on portfolio transformation to drive growth.

Among analysts, there is broad consensus that volume growth is improving, with commodity price trends also remaining relatively stable.

As the country’s largest fast-moving consumer goods maker, HUL is often seen as a bellwether for the broader sector. The 2% volume growth reported in the March quarter, up from flat growth in the previous quarter, is being read by analysts as a sign of improving demand across the industry.

HUL’s wide exposure across categories—home care, personal care and foods—makes this recovery in volumes a strong signal of a broader turnaround in FMCG.

Goldman Sachs said the earnings were in line with its estimates across all key parameters. The 2% volume growth in the March quarter was a positive signal for the sector, given HUL’s broad exposure across categories. However, the brokerage flagged the margin guidance cut as a "negative surprise", noting it was driven by higher marketing spends to support premiumisation.

Management expects low single-digit price hikes as commodity prices remain stable.

JPMorgan noted improving revenue growth outlook, although margin guidance was reset lower. Sales growth of 3% in the quarter was entirely volume-led. The company expects growth to pick up through financial year 2026, helped by portfolio changes and improving macro trends, the brokerage noted.

Positives: Beauty and wellbeing growth improved; personal care grew 3%; hair care saw double-digit growth.

Negatives: Home care revenue growth at 3% year-on-year; fabric wash volumes rose mid-single digits.

Jefferies said HUL’s new priority on growth will involve short-term margin pain. The firm cut its fiscal 2026 and 2027 Earnings Per Share estimates by 3–4% but maintained its positive view.

Revenue was entirely volume-led, which Jefferies viewed as a positive. Margins contracted due to input cost pressures. Rural growth outpaced urban, and the outlook remains upbeat thanks to a better crop, tax relief, and easing food inflation.

The brokerage has revised its target price to Rs 3,055 from Rs 3,225 and trimmed it's fiscal 2026 and 2027 EPS estimates by 5% in line with lower margin guidance.

Nuvama said HUL is offering better value to consumers through higher investments in core categories such as Lifebuoy, Glow & Lovely and nutrition drinks. This strategy is expected to help the company return to 4–5% volume growth.

Emkay maintained its rating, noting HUL’s uneven segmental performance. While beauty and personal care improved, home care and foods remained weak. The revised 22–23% margin guidance underlines HUL’s aggressive intent to push growth in beauty and wellbeing.

Nirmal Bang flagged that this was the sixth straight quarter of near-flat sales and Ebitda growth. It expects financial year 2026 to remain tepid on the margin front, with the new guidance indicating muted earnings growth ahead, despite innovation and price corrections.