HUL margin slips again as costs outpace revenue growth
Revenue grew 12.22% year on year, but a higher tax rate and lower other income limited net-profit growth to 3.79%.
Filed 28 Oct 2026, 19:24 IST · after market close · Hindustan Unilever Ltd (HINDUNILVR)
Key takeaways
- Consolidated operating margin narrowed 0.53 percentage points year on year to 22.43% as expenses grew 12.99%, faster than revenue at 12.22%.
- Consolidated net profit rose only 3.79% year on year as the tax rate increased 2.15 percentage points and other income fell 50.61%.
- Operating margin fell for a second straight quarter from 23.49% in Q4FY26 to 22.43% in Q2FY27, while HUL remained 9.96 percentage points above the 17-peer FMCG median.
Price around the results
Revenue growth did not fully reach profit
Hindustan Unilever reported consolidated revenue growth of 12.22% year on year in Q2FY27, while operating profit grew 9.65%. Sequentially, revenue rose 5.10% and operating profit increased 3.60%, but the faster 5.55% rise in expenses narrowed operating margin by 0.33 percentage points to 22.43%.
Two-quarter margin decline continues
Operating margin has declined for a second straight quarter, from 23.49% in Q4FY26 to 22.76% in Q1FY27 and 22.43% in Q2FY27. The margin was still 9.96 percentage points above the median of 17 FMCG peers that had reported the same quarter. Year on year, the margin contraction was 0.53 percentage points as costs grew faster than revenue.
Lower other income and higher tax weighed on profit quality
Net profit rose 3.79% year on year, well below revenue growth, as the tax rate increased 2.15 percentage points to 26.69% and other income fell 50.61%. Other income accounted for 4.25% of profit before tax, so it was not the main earnings driver, while interest expense fell 42.64% year on year. Sequentially, the tax rate rose 0.48 percentage points and other income increased 43.36%.
Management points to portfolio and channel changes
Management said it expects FY2027 to be better than FY2026, driven by portfolio and channel transformation, and said consolidated EBITDA margin should remain within its 22-24% guided range. The company told analysts that Home Care delivered 22% underlying sales growth, while Foods grew 9%; it also attributed softer tea performance to inflation and mass tea. Management said commodity inflation is expected to continue in the short term, while it highlighted bodywash sampling and in-store activations and the launch of Horlicks protein powder.
No immediate market reaction after the late filing
The consolidated results were filed after market close on 28 October 2026, so there was no immediate market reaction in the reported data. After its last eight results, the stock rose three times and fell five times, with a median absolute move of 3.27%, providing the relevant historical reaction range.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹18,226 cr | ₹17,341 cr | +5.10% | +12.22% |
| Other income | ₹162 cr | ₹113 cr | +43.36% | -50.61% |
| Expenses | ₹14,137 cr | ₹13,394 cr | +5.55% | +12.99% |
| Operating profit | ₹4,089 cr | ₹3,947 cr | +3.60% | +9.65% |
| Operating margin (%) | 22.43% | 22.76% | — | — |
| Interest | ₹74 cr | ₹75 cr | -1.33% | -42.64% |
| Depreciation | ₹363 cr | ₹353 cr | +2.83% | +1.40% |
| Profit before tax | ₹3,814 cr | ₹3,632 cr | +5.01% | +6.83% |
| Tax | ₹1,018 cr | ₹952 cr | +6.93% | +16.21% |
| Net profit | ₹2,796 cr | ₹2,680 cr | +4.33% | +3.79% |
| EPS (₹) | ₹11.87 | ₹11.38 | +4.31% | +3.85% |
Operating margin of 22.43% compares with a Fast Moving Consumer Goods sector median of 12.47% across 17 peers that have reported Q2FY27.
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 22% underlying sales growth, driven by double-digit underlying volume growth.
- Foods delivered 9% underlying sales growth, with low-single-digit underlying volume growth.
Guidance & outlook
- The company expects FY2027 to be better than FY2026, driven by portfolio and channel transformation.
- The company expects consolidated EBITDA margin to remain within the current guided range of 22-24%.
- The company aims to drive competitive, volume-led profit growth through its WINI strategy.
- The company says the underlying demand environment remains resilient, supported by healthy macro indicators.
Expansion
- No capacity, plant, capex, acquisition, mine or commissioning expansion was stated in the provided pages.
New products
- Horlicks expanded into the protein segment with the launch of Horlicks protein powder.
- The company expanded Simple with a new Barrier Repair Range and launched premium Body Serum lotions under Dove.
New initiatives
- The company is pursuing portfolio and channel transformation to improve FY2027 performance.
- Bodywash penetration and market leadership were supported by increased sampling initiatives and in-store activations.
Competition
- Focused market development actions expanded penetration, supported volume resilience and strengthened market leadership.
Problems & risks
- Commodity inflation is expected to continue in the short term.
- The Health & Wellbeing business had subdued performance in OZiva.
- Tea performance was moderated by inflation, with softer performance in mass tea.
- The operating context included elevated commodity prices.
What to watch
- Whether operating margin holds above 22.43% after the second straight quarterly decline.
- Whether expenses continue to grow faster than revenue after the 5.55% versus 5.10% sequential gap.
- Whether the tax rate moves below 26.69% and other income remains around its 4.25% share of profit before tax.