Hindustan Unilever (HUL) plans to raise capital expenditure to about 3% of topline in the next five years from 2% in the previous five years, as India’s largest consumer-goods company bets on rising consumption, premiumisation and new categories to drive volume-led growth.
At its Capital Markets Day on Friday, HUL widened its medium-term earnings before interest, tax, depreciation and amortisation (Ebitda) margin range to 22-24%, from its earlier guidance of 22.5-23.5%. The company reported an Ebitda margin of 23.6% in FY26.
Capital Allocation Framework
The higher capex intensity marks a step-up in investment as HUL seeks to capitalise on what it calls “new India”—a market offering a rare combination of scale and rising per-capita consumption.
The company said more than 85% of its capex over the past five years was directed towards growth and savings initiatives, while more than 75% of future spending is expected to go towards similar priorities. The higher capex will also be part of a broader capital allocation framework that includes reshaping its portfolio towards high-growth spaces, making bolt-on acquisitions and providing shareholder payouts, while maintaining its focus on 100% cash conversion.
“Structural shifts in new India present an attractive FMCG opportunity,” HUL said, adding that it would leverage its portfolio to unlock competitive volume-led growth.
HUL reported FY26 turnover of Rs 63,763 crore, operating cash flow of Rs 10,999 crore and an Ebitda margin of 23.6%. Its return on capital employed stood at 110.9%.
At the FY26 turnover level, a move in capex intensity from 2% to 3% would translate into an illustrative increase from around Rs 1,275 crore to Rs 1,913 crore, it said. The actual investment, however, will depend on the turnover base in the relevant year, it added.
The strategy comes as HUL’s underlying sales growth has gathered pace. Growth rose to 10% in the June quarter of FY27 from 7% in the March quarter, 5% in the December quarter and 3% in the first half of FY26. The company said sharper resource allocation, faster execution in key pockets and a dedicated organisation for quick commerce helped improve performance.
Premiumisation is a key pillar of the strategy, with HUL investing disproportionately behind premium brands. More than 60% of its advertising expenditure is now on digital platforms.
Home care, which contributes roughly 37% of HUL’s turnover, is another major growth opportunity. The company sees significant headroom in the segment and expects premiumisation and format upgrades to drive growth. Consumers are increasingly moving from detergent bars to powders and then to liquids. About 63% of HUL’s users currently prefer powders, leaving room for further migration towards higher-value formats.
HUL is also looking to expand participation in relatively underpenetrated categories, while extending established brands into adjacent consumption occasions. Rural markets are a particular focus, with the company estimating that consumption opportunities there are growing about 1.8 times faster than in urban markets.
Quick commerce is becoming an increasingly important part of its route-to-market strategy. HUL has created a dedicated cross-functional organisation for the channel and expects India’s quick-commerce market to reach about Rs 2 lakh crore by FY28.
Beyond organic growth, the company will consider portfolio extensions, Unilever brands and bolt-on acquisitions in categories including male grooming, masstige skincare, fragrances, healthy snacking, protein, hydration and ready-to-drink products.
The company has also introduced an AI-enabled availability engine for quick commerce and is using AI across areas including consumer foresighting, social listening, content development and media optimisation.