HUL margin slips sequentially as higher tax pulls down profit
Year-on-year operating margin improved 0.29 percentage points, but net profit fell 3.70% after the tax rate rose 10.07 percentage points.
Filed 28 Jul 2026, 19:40 IST · after market close · Hindustan Unilever Ltd (HINDUNILVR)
Key takeaways
- Standalone operating margin rose 0.29 percentage points year on year as revenue grew 4.56% and expenses grew 4.17%.
- Standalone net profit fell 3.70% year on year because the tax rate increased 10.07 percentage points to 25.85%.
- Quarter-on-quarter operating margin declined 1.06 percentage points as expenses grew 7.34%, faster than revenue growth of 5.87%.
Price around the results
Sequential cost growth cuts into operating margin
HUL's standalone revenue grew 5.87% quarter on quarter, but expenses rose 7.34%, reducing operating margin by 1.06 percentage points. This reversed the margin improvement seen from Q1FY26 through Q4FY26, when the margin rose from 22.33% to 23.68%. Year on year, the picture was better: revenue growth of 4.56% exceeded expense growth of 4.17%, lifting operating margin by 0.29 percentage points.
Higher tax rate outweighs operating and interest gains
Net profit declined 3.70% year on year even as operating profit increased 5.90% and interest expense fell 41.82%. The tax rate rose 10.07 percentage points to 25.85%, which more than offset those gains. Other income was 4.45% of pre-tax profit, so it was not the main driver of reported profit; sequentially, it fell 67.56% and helped pull pre-tax profit down 7.46%.
HUL remains above the reported FMCG peer median
HUL's standalone operating margin was 6.50 percentage points above the 16.12% median for the nine FMCG peers that had reported the quarter. Management said market-development, channel-expansion and portfolio-transformation investments are continuing to scale. It also said FY27 is expected to be better than FY26, led by portfolio and channel transformation, while consolidated EBITDA margin is expected to remain around the current guided range.
Business commentary points to category gains and selective pressure
Management said Home Care delivered 14% underlying sales growth, its highest growth in three years, while Coffee recorded double-digit, volume-led growth. It also said focused initiatives boosted Vim Liquids penetration and that Bodywash recorded another quarter of double-digit growth. The presentation flags continuing commodity volatility and short-term inflationary pressure, with palm oil inflation affecting Skin Cleansing, while management described OZiva's performance as soft during the business transition.
Market reaction is still pending
The standalone results were filed after market close, so there is no reported market reaction yet. After the previous eight results, the stock moved down six times and up twice, with a median absolute move of 2.74%. That history provides the relevant benchmark when the market next responds.
Q1FY27 at a glance
Standalone figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹16,657 cr | ₹15,733 cr | +5.87% | +4.56% |
| Other income | ₹158 cr | ₹487 cr | -67.56% | +31.67% |
| Expenses | ₹12,889 cr | ₹12,008 cr | +7.34% | +4.17% |
| Operating profit | ₹3,768 cr | ₹3,725 cr | +1.15% | +5.90% |
| Operating margin (%) | 22.62% | 23.68% | — | — |
| Interest | ₹64 cr | ₹68 cr | -5.88% | -41.82% |
| Depreciation | ₹314 cr | ₹310 cr | +1.29% | -3.09% |
| Profit before tax | ₹3,548 cr | ₹3,834 cr | -7.46% | +9.37% |
| Tax | ₹917 cr | ₹896 cr | +2.34% | +79.10% |
| Net profit | ₹2,631 cr | ₹2,930 cr | -10.20% | -3.70% |
| EPS (₹) | ₹11.20 | ₹12.47 | -10.18% | -3.70% |
Operating margin of 22.62% compares with a Fast Moving Consumer Goods sector median of 16.12% across 9 peers that have reported Q1FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Home Care delivered 14% underlying sales growth, its highest growth in three years.
- Coffee delivered double-digit, volume-led growth, while RTD and Bru Gold continued to scale up.
Guidance & outlook
- The company expects FY27 to be better than FY26, led by portfolio and channel transformation.
- Consolidated EBITDA margin is expected to remain around the current guided range.
- The company will continue monitoring monsoon and geopolitical developments while the underlying economy remains resilient.
Expansion
- Investments in market development, channel expansion and portfolio transformation are continuing to scale.
New products
- Liquid I.V. launched a sugar-free variant and Vaseline launched a Gluta Hya Smoothening Body Lotion.
- Lux launched a refreshed Bodywash proposition combining skincare benefits with premium packaging.
New initiatives
- The company is using disciplined market development and consumer-centric innovations to strengthen growth and market leadership.
- The company is investing in newer offerings while transitioning the OZiva business.
- Focused initiatives are being used to boost Vim Liquids penetration.
Competition
- Home Care strengthened market leadership while maintaining volume resilience.
- Continued market development in Bodywash led to another quarter of double-digit growth.
Problems & risks
- The operating context included geopolitical disruption and volatile commodities and currency.
- Commodity volatility persists, with inflationary pressures expected to continue in the short term.
- Palm oil inflation persisted for the second consecutive year and affected Skin Cleansing.
- OZiva had a soft performance while the company transitions the business.
What to watch
- Whether standalone operating margin recovers from 22.62% after the 1.06-percentage-point sequential decline.
- Whether the tax rate moves back from 25.85% after its 10.07-percentage-point year-on-year increase.
- Whether Home Care sustains the 14% underlying sales growth reported this quarter.