Hindustan Unilever Ltd (HUL), the Indian unit of Anglo-Dutch consumer group Unilever Plc , reported an 18 percent rise in quarterly profit, beating estimates, helped by a revival in consumer spending and lower raw material costs.

The company, Asia’s largest consumer goods maker by market capitalisation, has been hurt in the last few quarters by weaker consumer demand in Asia’s third-largest economy that grew less than 5 percent in the past two fiscal years.

The company said on Monday its domestic consumer business grew at 8 percent during the quarter.

A sharp easing of inflation since September, an improvement in consumer sentiment on hopes of a revival in economic growth and a fall in commodity prices have pushed the Hindustan Unilever stock up nearly 25 percent since October.

Hindustan Unilever’s standalone net profit for the three months to Dec. 31 rose to 12.52 billion rupees ($202.85 million), up from the 10.62 billion rupees a year earlier, the company said in a statement on Monday.

Analysts were expecting the maker of Dove soap, Sunsilk shampoo and Lipton tea to make 10.81 billion rupees in profit, according to Thomson Reuters data. Ritwik Rai, FMCG analyst, Kotak Securities, said: “HUL’s 3QFY15 results disappointed as volume growth (3%, y/y) missed our estimates (5% est.). The company has reported that its volume and value growth remains ahead of the sector.  Gross margins expanded in line with expectations. Excluding one-time provisions in employee expenses, the reported EBITDA came in 5% below our estimates.

“We would expect that sales growth of the company shall pick up in the coming quarters, as lower inflation, improved sentiment help lift volume growth. Benefits of lower commodity prices are visible in the quarter, and will continue to be a useful tailwind for the company. The stock could see some near-term pressure, given sharp run-up in recent sessions and disappointing 3QFY15 results. However, our medium-term view on the stock remains constructive,” he added.

BUZZ: Hindustan Unilever share price slumps most since July 2009 after earnings
* Hindustan Unilever share price falls as much as 5.8 pct
* Heads towards biggest daily fall since July 2009
* Deutsche Bank says net profit of 12.5 bln rupees includes exceptional profit of 4 bln rupees
* Dec-quarter volumes grew by 3 pct vs Citigroup’s expectations of 5-6 pct

($1 = 61.7200 Indian rupees)

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