Shares of Hindustan Unilever Ltd. (HUL) experienced a significant drop of 4% in trading on April 24, 2025, following the release of its fourth-quarter results. The stock reached an intraday low of ₹2,324.2 per share, reflecting investor concerns over the company's declining earnings margins despite a slight increase in net profit. By 11:28 AM, the shares were trading at ₹2,330.4, down 3.79%, while the BSE Sensex fell 0.26% to 79,911.08.
In its Q4 FY25 earnings report, HUL announced a net profit of ₹2,493 crore, a 4% increase from ₹2,406 crore a year earlier. The company's revenue for the quarter was ₹15,000 crore, up from ₹14,693 crore, indicating a 3% growth. However, the Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) stood at ₹3,466 crore, only slightly higher than the ₹3,435 crore reported in the previous year. The EBITDA margin, however, fell to 23.1% from 23.4%, a decline of 30 basis points.
HUL's management expressed optimism about future growth, expecting improvements in the near to mid-term driven by portfolio transformation and favorable macroeconomic conditions. They anticipate that the first half of FY26 will outperform the second half of FY25. "If commodities remain where they are, price growth is expected to be in the low-single-digit range, and the company will continue to focus on driving volume-led competitive growth," a representative stated during a press conference.
Despite the positive outlook, the stock's initial post-earnings gains quickly evaporated as investors reacted to management's comments about moderating gross margins. The company is also preparing for the demerger of its ice cream business, expected to be finalized by the end of FY26.
In terms of segment performance, HUL reported that 37% of its revenue came from the Home Care business, while 25% was generated from Foods. The Beauty & Wellbeing and Personal Care segments contributed 21% and 15%, respectively. Notably, the Home Care segment saw revenue rise to ₹5,815 crore from ₹5,709 crore year-on-year, while the Beauty & Wellbeing segment increased to ₹3,265 crore from ₹3,062 crore.
On the other hand, the Foods segment's revenue was nearly flat at ₹3,896 crore, down from ₹3,910 crore last year, indicating a challenging environment for this category. The Personal Care segment also faced difficulties, with revenues remaining almost unchanged at ₹2,126 crore compared to ₹2,063 crore in the previous year.
HUL's board of directors has recommended a final dividend of ₹24 per share, bringing the total dividend for the financial year to ₹53 per share, which includes an interim dividend of ₹19 and a special dividend of ₹10 paid in November 2024. The company has not yet announced a record date for the dividend.
In the broader market context, HUL's share price decline reflected a more extensive trend of weakness among large-cap stocks in India. The Nifty FMCG index also saw declines, with nine of its 15 constituents trading lower. HUL's stock had opened higher post-results but quickly reversed course as the market reacted to the lack of significant surprises in the earnings report.
Analysts have mixed views on HUL's performance. Approximately 29 out of 35 analysts tracking the stock have a 'buy' rating, while 12 recommend holding and three suggest selling. The consensus target price for HUL shares stands at ₹2,584.26, indicating a potential upside of 10.4% from current levels.
Looking ahead, HUL's management remains committed to navigating the challenges posed by rising raw material costs and competitive pricing pressures. CEO Rohit Jawa emphasized the importance of innovation in high-growth areas and the need to enhance consumption in various product categories, particularly in nutrition drinks, where the company aims to regain market share.
Furthermore, HUL's recent acquisition of the direct-to-consumer brand Minimalist has reportedly generated a turnover exceeding ₹500 crore in FY25, signaling the company's ongoing strategy to expand its portfolio in high-demand segments.
In summary, while HUL's Q4 results showed some positive trends in net profit and revenue growth, the decline in EBITDA margins and the overall stock performance highlight the challenges the FMCG giant faces in a competitive market. As the company prepares for a strategic transformation and seeks to enhance its product offerings, investors will be closely monitoring its progress in the coming quarters.
