Hindustan Unilever‘s (HUL’s) home care business emerged as the standout performer in an otherwise mixed June quarter, delivering its strongest growth in three years even as profitability remained under pressure from higher input costs.
The company’s largest business, contributing 39% to June-quarter topline, posted 14% underlying sales growth (USG), driven by 9% volume growth—the fastest among HUL’s segments during the quarter. Limited price hikes of about 5%, coupled with broad-based demand across bars, powders and liquid detergents, also supported growth, analysts tracking the company said. Some of HUL’s biggest brands such as Surf Excel, Rin, Wheel and Vim are part of the home care unit.
Sector experts attributed the performance to sustained demand for fabric wash (detergents) and household care brands (dishwashers), reflecting consumers’ continued willingness to spend on everyday essentials even as geopolitical uncertainty and inflation weighed on discretionary consumption.
“Fabric wash recorded double-digit (sales) growth across formats, while household care continued its strong momentum driven by liquids and market development,” Niranjan Gupta, chief financial officer of HUL, said during the company’s post-results interaction on Tuesday.
Input Cost Inflation
However, the robust sales performance did not translate into comparable earnings growth. Segment operating profit rose just 1% year-on-year to Rs 1,137 crore, highlighting the impact of higher commodity costs and continued investments in brands.
“The quarter reflects our strategy of investing behind growth opportunities while navigating commodity inflation. We remain focused on strengthening market leadership through innovation, distribution expansion and premiumisation,” Priya Nair, chief executive officer and managing director, HUL, said.
Analysts said the margin trade-off was expected given persistent inflation in key crude oil-linked raw materials. JP Morgan said in a report on Wednesday that HUL had implemented calibrated price increases across the segment to partially offset commodity inflation.
Gupta said the company passed on only about half of the roughly 10% input-cost inflation through price increases during the June quarter. Whether additional price hikes are taken in the September quarter will depend on movements in crude-linked commodities, though any increases would remain calibrated, he added.
Volume Expansion
Analysts at Anand Rathi said the home care business also benefited from HUL’s sharper focus on premium liquid formats while continuing to expand its presence in mass-market segments.
“Unlike categories that relied heavily on pricing (such as personal care), HUL’s home care performance was underpinned by volume expansion, reflecting deeper household penetration, product innovation and disciplined market execution,” the brokerage said.
Goldman Sachs expects momentum in the home care business to remain healthy through FY27, supported by gradual price-led growth as commodity costs are passed on to consumers. While input-cost pressures are likely to persist in the near term, the brokerage believes the segment remains well positioned to sustain above-average growth.
For HUL, the June quarter reinforced home care’s position as its most resilient growth engine. While margins are likely to remain under pressure in the near term, robust volume growth, rising penetration of liquid formats and continued innovation should help the business maintain its momentum and outperform the broader FMCG market.