💰 Financial Performance

Revenue Growth by Segment

Home Care: INR 22,808 Cr (+4.8% YoY); Beauty & Wellbeing: INR 12,821 Cr (+2.1% YoY); Personal Care: INR 9,039 Cr (-2.9% YoY); Foods: INR 15,098 Cr (-0.36% YoY); Others: INR 914 Cr (+15% YoY). Total Turnover for FY25 was INR 60,680 Cr, up 1.85% from INR 59,579 Cr in FY24.

Geographic Revenue Split

Primarily domestic (India) focused; exports and consignment sales contributed INR 914 Cr (1.5% of total turnover) in FY25. Rural demand recovery is cited as a key driver for future volume growth.

Profitability Margins

Operating profit margin remained stable at 22% in FY25. Net profit margin improved from 17.0% to 17.5% in FY25. Return on Net Worth increased from 20.0% to 21.2% YoY.

EBITDA Margin

EBITDA margin for SQ'25 was 23.2%, down 90 bps YoY due to higher business investments. H1 FY26 EBITDA margin was 23%, down 110 bps YoY. FY25 EBITDA was INR 14,289 Cr (+0.7% YoY).

Capital Expenditure

Historical investments in subsidiaries include INR 352 Cr loan to Unilever India Exports and INR 10 Cr to Lakme Lever. Cash management investments in Mutual Funds and T-Bills totaled INR 20,943 Cr as of March 31, 2025.

Credit Rating & Borrowing

Reaffirmed at CRISIL AAA/Stable. Borrowing costs are negligible as the company maintains a Debt-Equity ratio of 0.0 and an interest coverage ratio of 100.5x.

⚙️ Operational Drivers

Raw Materials

Key raw materials include palm oil and its derivatives (for Skin Cleansing), tea and coffee (for Beverages), and chemicals for Skin Care. Commodity price volatility in these areas directly impacts gross margins.

Import Sources

Sourced globally and domestically; specifically mentions PT. Unilever Oleochemical Indonesia as a key related party supplier for raw materials.

Key Suppliers

PT. Unilever Oleochemical Indonesia (UOI) is a major supplier with a shareholder-approved transaction limit of INR 3,000 Cr per financial year for raw materials.

Capacity Expansion

Current capacity not disclosed in MT; however, the company is 'reshaping the portfolio' by accelerating in high-growth demand spaces and demerging the lower-margin Ice Cream business to improve overall EBITDA by 50-60 bps.

Raw Material Costs

Operating costs for FY25 were INR 47,180 Cr (77.7% of turnover). Gross margins improved by ~400 bps in FY24 due to moderating commodity prices, though SQ'25 saw pricing volatility in Skin Cleansing and Beverages.

Manufacturing Efficiency

Return on Capital Employed (ROCE) improved significantly from 96.3% in FY24 to 108.2% in FY25, indicating high capital efficiency.

Logistics & Distribution

Distribution is managed through an extensive network; costs are part of the 'other expenses' which saw phasing impacts in SQ'25.

📈 Strategic Growth

Expected Growth Rate

3%

Growth Strategy

Strategy based on four pillars: market development, premiumization, reshaping the portfolio (e.g., Ice Cream demerger), and channel focus (e-commerce and specialist stores). The demerger is expected to add 50-60 bps to EBITDA margins. Focus on volume-led growth in H2 FY26.

Products & Services

Soaps (Skin Cleansing), Detergents (Home Care), Tea and Coffee (Beverages), Skin Creams (Skin Care), Ketchup and Soups (Foods), and Ice Cream (until demerger).

Brand Portfolio

Lakme, Kwality Wall's, Minimalist, Surf Excel, Rin, Wheel, Dove, Lux, Ponds, Horlicks.

New Products/Services

Minimalist brand (acquired/partnered) delivered strong double-digit growth in H1 FY26. Focus on 'bold launches' in high-growth demand spaces.

Market Expansion

Expanding specialist store presence (cosmetic stores and chemists) and disproportionate investment in e-commerce, where CAC to LTV ratios are closely monitored.

Market Share & Ranking

Market leader in 85% of its business segments; reported gains in turnover-weighted market shares in SQ'25.

Strategic Alliances

Partnership with Minimalist; Material Related Party Transaction agreement with PT. Unilever Oleochemical Indonesia for raw material supply up to INR 3,000 Cr annually.

🌍 External Factors

Industry Trends

FMCG industry is shifting toward premiumization and e-commerce; rural demand is recovering while urban consumption shows some delay in pantry replenishment.

Competitive Landscape

Intensifying competition from both regional players and large FMCG peers; HUL maintains leadership through 'market development' and 'premiumization'.

Competitive Moat

Strong moat derived from market leadership in 85% of portfolio, extensive distribution network, and brand equity (Lakme, Dove, etc.). Sustainable through high ROCE (108.2%) and EVA-focused capital allocation.

Macro Economic Sensitivity

Highly sensitive to rural demand recovery and inflation; easing inflation is expected to support volume growth in FY25.

Consumer Behavior

Consumers delayed pantry replenishment in SQ'25 in expectation of lower shelf prices due to pricing volatility.

Geopolitical Risks

Resolution of prior years' tax matters between UK and Indian tax authorities resulted in a one-off positive impact on PAT in SQ'25.

⚖️ Regulatory & Governance

Industry Regulations

Transitory impact from GST changes noted in SQ'25; compliance with SEBI (SBEB) Regulations for employee share plans.

Environmental Compliance

Integrated Report focuses on Natural, Human, and Social Capital; specific ESG compliance costs in INR are not disclosed.

Taxation Policy Impact

Normalized Effective Tax Rate is 26.6%. H1 FY26 reported ETR was 20.5% due to one-off tax settlements.

Legal Contingencies

Resolution of prior years' tax matters between UK and Indian tax authorities provided a one-off benefit. 92 integrity incidents reported in FY25, resulting in 37 employee terminations.

⚠️ Risk Analysis

Key Uncertainties

Volatility in commodity prices (palm oil, tea) and the pace of rural demand recovery are the primary uncertainties impacting margins and volume growth.

Geographic Concentration Risk

Highly concentrated in the Indian market; exports represent only ~1.5% of turnover.

Third Party Dependencies

Significant dependency on PT. Unilever Oleochemical Indonesia for raw materials (up to INR 3,000 Cr/year).

Technology Obsolescence Risk

Mitigated by digital transformation in e-commerce and specialist channel focus; CAC to LTV ratio is a primary internal metric.

Credit & Counterparty Risk

Low risk; debtors turnover of 19.8x and high liquidity (INR 20,943 Cr in cash equivalents) ensure strong receivables quality.