FMCG major Hindustan Unilever is prioritising sales growth over margins in FY26, as the company remains optimistic about a gradual revival in urban demand, driven by the government’s fiscal stimulus measures. HUL’s management, speaking on Thursday, announced a reduction in its Ebitda margin guidance to 22-23%, down from the previous range of 23-24%. This revision comes as the company increases investments in advertising, sales promotions, trade channel spending, and brand development across segments. Gross margins are also expected to moderate as the firm focuses on delivering the right price-value proposition. Ebitda is earnings before interest, tax, depreciation and amortisation.
The strategic shift from margins to sales growth has prompted a bullish stance by brokerages such as Jefferies, Goldman Sachs, JP Morgan and Nuvama, who see this as a positive move by the company to provide better value to consumers despite some near-term pain. HUL’s shares closed flat on Friday on the BSE at Rs 2,331.60 apiece after falling 4% on Thursday.
“We think that on macro fundamentals, the triggers are tending towards positive now. The monetary changes on interest rates, the tax relief, crude oil, projected monsoon, resilient growth in rural areas give us a stronger market demand. We also feel very confident internally about what we’ve done around our core business. So, we want to lean in with investments into the business. We want to play to win and look at growth first and Ebitda secondarily,” Rohit Jawa, CEO & MD, HUL, said on Thursday during an analysts’ call. Jawa also said that the company would drive volume-led growth as price growth was likely to moderate to low single-digits in FY26.
“HUL has made a significant strategy shift, which implies near-term margin pain. This change led to a 4% correction in the share price in the previous session (Thursday), triggered by concerns among ‘short-sighted’ investors and analysts,” Jefferies said on Friday. The brokerage retained a ‘buy’ rating on the stock and a target price of Rs 2,950 apiece.
“In FY26, we expect HUL to provide consumers better value via higher investments and building a stronger core—especially Lifebuoy, Glow & Lovely and Nutrition Drinks; allowing HUL to return to 4–5% volume growth,” Nuvama said on Friday. The brokerage maintained its ‘buy’ stance, with a price target of Rs 3,055 apiece.
JP Morgan also noted a better revenue growth outlook for HUL for FY26, helped by portfolio changes and improving macro trends, adding that the sales growth of 3% in the March quarter (of FY25) for the firm was volume-led.
Brokerage Emkay Global, however, pointed to HUL’s inability to fully benefit from the improved demand in rural areas. The broking house though maintained its ‘add’ rating, with a target price of Rs 2,400.
“In Q4, while the beauty and personal care segments showed improvement, performance in home care and food was weak. Revised near-term operating margin guidance signals HUL’s aggressive intent to stimulate growth, especially in beauty & wellbeing,” the brokerage added.