Optimistic HUL targets 10% earnings growth over medium-to-long term

Mint

5 hours ago

New Delhi: Hindustan Unilever Ltd (HUL) is targeting earnings growth of about 10% over the medium-to-long term, chairman Nitin Paranjpe said at the company's 92nd annual general meeting on Monday.
The projection comes despite a challenging 2024-25 that was marked by muted market growth, slow rural recovery, and moderating urban expansion.
"It was a difficult year,' acknowledged Paranjpe, addressing shareholders virtually. 'Market growths were muted, rural growth was recovering, but recovering slowly, but urban growth was moderating right through the course of the year.'
He, however, added that broad macro-economic indicators such as lower inflation, tax changes resulting in higher disposable income, and a good monsoon would lead to a 'gradual improvement' in demand.
'... Our aspiration is to deliver an earnings growth of about 10%-plus as we move forward. Not every single year, but over the medium-to-long term. That's the aspiration of the business,' said Paranjpe, chair of India's largest packaged consumer goods company.
'In the near-term and the medium-term, we should see an improvement in market conditions. Macro conditions are getting better. Agricultural sector and produce has been better. There is the expectation that this year's monsoon is likely to be better. Inflation has been coming down and that helps, due to which the rural economy should continue to do well,' he said.
Reduced inflation, the tax changes, changes in monetary policy will all 'benefit the economy and the sentiment in this market, as a result of which we should see an improvement', he added.
However, Paranjpe also pointed to 'very significant fluctuation' in commodity prices.
'Some commodities had deflation, while some others saw some increases. Tea, palm, etc., had some increases, while crude, soda ash, etc., had substantial decreases. As a consequence, price-led growth did not happen this year,' Paranjpe said, emphasising that . 'it's worthwhile recognizing that your company did very well. We restored volume-led'.
HUL, which sells soaps, shampoo, tea, and ketchups, reported a turnover of ₹ 60,680 crore for FY25, up 2% over the year prior, driven by underlying volume growth of 2%. Profit after tax grew 5% to ₹ 10,644 crore.
'Now, absolute growth, I agree with you that 2% is not what we would like to get going forward, but the fact that we have strengthened our competitiveness, the fact that we have taken other interventions to strengthen our portfolio and build capabilities, augurs well as we look ahead into FY26 and beyond,' Paranjpe said.
He also reiterated HUL's 'Billion Aspirations' strategy aimed at catering to the evolving demands of Indian consumers. The strategy's focus areas include strengthening the company's core portfolio, nurturing future core segments, exploring new areas for demand generation, and strengthening HUL's visibility in new-age channels.
Addressing queries on the demerger of HUL's ice cream business, Paranjpe said it was driven by distinct operational characteristics, including a unique go-to-market strategy, dedicated cold chain requirements, seasonality, and higher capital intensity as compared with other segments.
HUL's board of directors in November gave an in-principle approval to demerge the ice-cream business into a separate, listed entity. The ice-cream unit accounts for about 3% of thecompany's business. The National Company Law Tribunal has advised holding a shareholder meeting on 12 August to progress the demerger, which is expected to be completed by the January-March quarter of FY26.