Hindustan Unilever Ltd. - Research Report

About the Company:

Hindustan Unilever Limited was incorporated on October 20, 1933 as 'Lever Brothers India Limited'. In 1956, Hindustan Vanaspati Manufacturing Company Limited and United Traders Limited merged with the Company and the name was changed from Lever Brothers Limited to Hindustan Lever Limited. In June 2007, the Company changed its name from Hindustan Lever Limited to Hindustan Unilever Limited. The Company is a subsidiary of the Anglo-Dutch company Unilever.

The Company is in the fast-moving consumer goods (FMCG) business comprising primarily into four business segments such as, home care, personal care, foods and refreshments. The company’s brands hold the top 2 spots in most categories where it has a presence and has a stable brand power in 80% of its businesses. 9 out of 10 households use HUL’s branded products in day to day life.

The company has over 28 owned factories in India and over 50 manufacturing partners, that produce over 80+ bn units manufactured annually. It manufactures over 250 SKUs at its nano-factories. Its Dapada and Sonepat factories have the title of ‘End-to-End Lighthouse’, awarded by the World Economic Forum for implementing advanced fourth industrial revolution solutions. Through this manufacturing capacity it caters to 9+ million retail outlets with the help of 3500+ distributors.

The company has 6 global R&D centers in 5 countries with over 5,000 professionals, including 3 centers in India, with over 20,000 patents, patent applications, and deep science and technology expertise in emerging areas such as Renewable Consumers Ingredients, Next Generation Biology, and Positive Nutrition.

 

Business segments:

The company has a portfolio of over 50 brands, spanning 16 FMCG categories, including 19 brands with a turnover of more than Rs. 60,680 in recent fiscal.

The products are split into various categories as follows:

1. Home Care: Under Home Care business segment, the company offers detergent bars, detergent powders, detergent liquids, scourers, purifiers, etc under its brands such as Surf excel, Wheel, Sunlight, Rin, Cif, Comfort, Vim, Domex and Nature Protect.
2. Beauty and Personal Care: The company offers products in the categories of oral care, skin care, soaps, hair care, deodorants, talcum powder, color cosmetics, salon services, etc. under the brands like Dove, Ponds, Lifebuoy, Pepsodent, Pears, Liril, Lux, Ayush, Tresemme, Sunsilk, Clinicplus, Closeup, Axe, Hamam, Acne Squad, Clear, Lakme, Rexona, HellMans’, Glow and Lovely, Glow and Handsome, Find your happy place, Elle 18, Dermalogica, Indulekha, Breeze, Love Beauty and Planet, Nexxus, Novology, Pukka, Simple, VWash, Moti and Vaseline.
3. Foods and Refreshments: The company offers culinary products like tomato-based products, fruit-based products, soups, etc, tea, coffee, nutrition drinks, ice-cream, and frozen desserts, through brands like Boost, Brook Bond 3 Roses, Brook Bond Red label, Brook Bond Taaza, Brook Bond Taj Mahal, Bru, Cornetto, Horlicks, Horlicks Diabetes Plus, Horlicks Lite, Horlicks Mother Plus, Horlicks Nutri Gummies, Horlicks Protien Plus, Liquid I.V., Horlicks Women’s Plus, Junior Horlicks, kissan, Knor, Kwality Wall’s, Lipton and Magnum.
4. Other: The segment includes exports, consignment etc. It aims to export brands, such as Vaseline, Dove, Pears, Bru, Red Label, Lakmē, Horlicks, and Boost, to effectively provide cross-border sourcing of FMCG products to other Unilever companies worldwide.

Fundamentals:

CMP	Rs. 2516
52 - week high / low	Rs. 3,035 / 2,136
Dividend % (consolidated)	1.78%
ROE	20.7 %
BV(Rs.)	210
Sales (Rs.)	63,121 Cr.
Debt to Equity	0.03
P/E ratio	53.9
EPS (consolidated)	45.3
P/B ratio	11.4
Market Cap	561999 Cr.
Face value (Rs.)	1
PEG Ratio	6.25
EVEBITDA	35.1

 

Financial Results:

In Fy25 company reported Sales of Rs. 60680 with 2% growth from previous year. Its Ebitda margins reached 23.5% with a minor setback of 30 Bps. Company’s PAT was at Rs. 10,644 marking 5% growth from previous fiscal. In MQ25, company reported underlying sales and Volume growth of 3% and 2% respectively.

On segmental front, company’s home care business reported revenue of ₹22,972 cr. with USG of 5%. Its Fabric Wash business reported Mid-single digit volume growth driven by outperformance in premium fabric wash and fabric conditioners. Liquids portfolio continued to deliver strong double-digit volume growth. Household Care delivered High-single digit volume growth led by double digit growth in liquids portfolio and delivering promising early results from portfolio expansion.

Company’s Beauty & Wellbeing segment reported ₹13,073 cr. Revenue with USG of 2%. Hair Care business delivered Double-digit growth led by volume. Its Skin Care and Colour Cosmetics reported Low-single digit decline, category impacted by mass skin care performance. Strategic investments in channels of the future continue to yield strong results, delivering competitive double-digit growth.

Its Personal Care business segment reported ₹9,168 cr Revenue with USG of – 2%. Its Skin Cleansing business segment delivered Low-single digit price led growth. Non-hygiene segment witnessed growth momentum, delivering high single digit growth. Bodywash grew in double digit and continued to strengthen its market leadership position. Oral Care segment showcased Low-single digit growth led by pricing. Closeup extended its portfolio into the whitening space with White Now range.

Company’s Foods business clogged ₹15,294 cr.Revenue with flat USG. In Beverages business Tea delivered low-single digit growth driven by pricing. Maintained value and volume leadership. Coffee continued to deliver double-digit growth. Its Nutrition Drinks Business Turnover declined, impacted by continued category headwinds and transitionary impact of pack-price architecture change. Its Packaged Foods reported Mid-single digit volume led growth driven by outperformance in Ketchup, Mayonnaise and International cuisines. Company’s Ice Cream business delivered Double-digit volume led growth accelerated by strong summer innovation pipeline landed in the quarter.

 

Key Highlights:

1. Hindustan Unilever Limited (HUL) recently acquired 14.3% stake in Lucro Plastecycle Private Limited (Lucro), a leading player in recycled flexible plastics. It is a well-integrated waste management, recycling and product manufacturing company, working to create a circular plastics economy for a better tomorrow. HUL’s investment is a step forward towards its sustainability goals to scale up the use of recycled flexible plastic content in packaging, in line with the Government’s vision of zero plastic waste future. The investment aims to strengthen plastic circularity by increasing the availability of recycled content for flexibles, providing a roadmap for businesses to move towards sustainable plastic packaging and address the challenge of hard-to-recycle flexible plastic.
2. The company has also acquired the palm undertaking of Vishwatej Oil Industries Private Limited, as a part of HUL’s Palm localisation strategy. The palm undertaking is based in the Kamareddy district of Telangana. The proposed plan involves setting up sapling nurseries, palm fresh fruit bunch collection centres and a state-of-the-art palm oil mill in the state. HUL will establish a comprehensive farmer outreach programme to provide technical assistance to farmers for growing palm oil and introduce the best-in-the-class farming practices in line with the company’s global sustainable and regenerative agriculture principles.
3. HUL recently signed a definitive agreement to acquire the premium actives-led beauty brand Minimalist. This marks another step in the transformation journey of its Beauty & Wellbeing portfolio towards evolving and higher growth demand spaces. Minimalist was built on robust fundamentals and has delivered profitable growth since inception. The business has rapidly scaled to cross an Annual Revenue Runrate (ARR) of INR 500 cr in a short span of 4 years.
4. HUL has recently demerged its ice cream business and one equity share of KWIL was allotted for every one equity share held in HUL. Upon demerger and listing of KWIL, the entire shareholding of KWIL will be held directly by shareholders of HUL. KWIL is a leading listed ice cream company in India, with an experienced management equipped with greater focus and flexibility to deploy strategies suited to its distinctive business model and market dynamics, thus realising its full potential. Further, the business will continue to be equipped with the portfolio, brand and innovation expertise from the largest global Ice Cream business enabling it to keep winning in the marketplace.
5. Hindustan Unilever recently launched Nexxus in India, elevating its portfolio and marking a milestone moment and strategic entry into India’s prestige and professional beauty segment. Nexxus’ advanced formulations are powered by Trillion Protein Transfusion Technology, which delivers trillion proteins and lipids , directly onto the hair cortex to help repair visible signs of damage. From the very first use, hair is 11x stronger, smoother, and shinier—with damage repaired from the first use.
6. HUL also Liquid I.V. to India which was acquired by its parent company Unilever in 2020 with joining the Health & Wellbeing Collective, a global business in the fast-growing vitamins, minerals and supplements market. Since then, it has quadrupled in size and it has ambitions to get bigger. Liquid I.V. brand was designed to deliver enhanced hydration and restore the electrolyte balance lost through exercise and sport, heat and active lifestyles.
7. HUL also launched Pukka – UK's #1 herbal infusion brand in India. It was founded in 2001 by entrepreneur Tim Westwell and herbalist Sebastian Pole, Pukka was born out of their shared passion for people, plants, and the planet. After travelling through the Himalayas to study Ayurvedic herbal medicine and returning to the UK, Tim and Sebastian combined Ayurveda with scientific research to create delicious herbal blends that cater to daily health and wellness needs.

Conclusion:

Hindustan Unilever Ltd. continues to stand out as a resilient and fundamentally strong player in India’s FMCG sector. Backed by a diversified product portfolio, robust distribution network, and consistent profitability, HUL has demonstrated its ability to navigate market cycles and maintain leadership in core categories. While near-term headwinds such as rural demand softness and margin pressures may persist, the company’s focus on premiumization, digital transformation, and sustainability initiatives positions it well for long-term growth.

For long-term investors seeking stability, steady returns, and exposure to consumer staples, HUL remains a dependable pick. However, valuations appear stretched compared to historical averages, suggesting a staggered or correction-based entry strategy could be prudent.

In essence, HUL is a classic "buy-on-dips" stock for investors who value consistency over volatility.

HET ZAVERI
info@smartinvestment.in

 

 

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