Hindustan Unilever Stock Slumps 7% as Exceptional Tax Gains Skew Profit Comparisons

Market Reaction Follows Post-Tax Profit Decline

Hindustan Unilever Limited (HUL) saw its shares tumble 7% on the Bombay Stock Exchange this Wednesday. The sell-off followed the release of first-quarter fiscal results showing a 3% year-on-year decline in net profit, which totaled ₹2,673 crore. This contraction was primarily linked to a high base effect from a one-off tax credit gain recorded during the same period last year.

Revenue Surge Hits 13-Quarter Peak

While the profit figures dampened investor sentiment, the company's top-line performance showed significant momentum. HUL achieved a 10.26% increase in sales revenue, reaching ₹17,149 crore. Underlying Sales Growth (USG) hit 10%, representing the highest expansion rate for the company in 13 quarters. According to CEO and Managing Director Priya Nair, this growth was balanced equally between volume increases and strategic pricing adjustments.

Segment Performance and Rural Recovery

The company's diverse portfolio showed varying levels of expansion across several key categories:

• Home Care: Achieved 14% USG, marking a three-year high.
• Beauty & Personal Care: Beauty & Wellbeing grew by 12% through high-single-digit volume gains, while Personal Care rose by 4%.
• Foods & Refreshment: The segment saw 7% USG, bolstered by lifestyle nutrition and coffee, though premium tea volumes grew only in the low single digits.
• Premiumization: Hair care and skin care both benefited from double-digit growth in high-end product formats.

Analysts noted that rural markets are currently outperforming urban areas, providing a stable foundation for demand despite ongoing inflationary pressures. HUL management cited rising input costs as a persistent challenge for operating margins but emphasized a strategy focused on volume-led revenue growth and channel expansion to maintain its market leadership.

Source: The Hindu — Business