Shares of Hindustan Unilever (HUL) were on track to post their worst annual performance in over two decades, as investors largely stayed away from consumer goods stocks this year amid a challenging sector outlook marked by rising input costs, slowing growth expectations and concerns over consumer demand.
So far in 2026, the stock has lost nearly 20%, falling to ₹1,858 apiece and dragging the company’s market capitalisation below ₹4.5 lakh crore. The stock last witnessed a comparable annual decline in 2004, when it crashed 30%. Since then, it has recorded a double-digit annual loss only once, in 2024.
Reflecting the sustained selling pressure, HUL shares have closed in the red in each of the past five months, with losses widening further in October. The stock briefly touched its lowest level since 2019 earlier this month before witnessing a mild recovery.
The weakness is not limited to HUL. As many as 12 of the 15 constituents in the Nifty FMCG index, including ITC, Godrej Consumer Products, Dabur India, Colgate-Palmolive, Britannia Industries and Nestlé India, have declined by between 20% and 40% in 2026.
Market participants are increasingly concerned that higher commodity prices, particularly crude oil and palm oil, are squeezing margins across the consumer goods sector. Companies are also facing challenges in passing on the full impact of rising input costs to consumers, adding to concerns over profitability and earnings growth.
How did HUL perform across its key business segments in Q2?
The company delivered a mixed performance in the September quarter, with consolidated revenue growing 15% year-on-year (adjusted for the ice-cream demerger) to ₹18,070 crore. This was higher than Motilal Oswal’s estimate of ₹17,490 crore and marked the highest growth in the past 14 quarters.
Despite the inflationary environment, underlying volume growth stood at 7% year-on-year. Growth was partly affected by softer volumes in the Tea and Soaps categories, while the rest of the portfolio witnessed an acceleration in volume growth.
Home Care revenue grew 21% year-on-year on double-digit underlying volume growth (UVG), but EBIT increased by just 3%. Its EBIT margin contracted 300 basis points year-on-year to 16.2%, the lowest in 16 quarters, amid elevated raw material inflation.
Beauty and Wellbeing reported 16% revenue growth and 16% EBIT growth. Personal Care recorded 8% revenue growth, while EBIT declined 9%. Food and Refreshment posted 9% revenue growth and 16% EBIT growth.
Amid elevated input cost inflation and gradual price hikes, gross margin contracted 400 basis points year-on-year to 48%, below Motilal Oswal’s estimate of 50% and the 49.5% reported in the first quarter of FY27.
However, the brokerage noted that pressure on EBITDA margins was limited, with the margin declining 130 basis points year-on-year to 22.4%. This was partly offset by lower advertising and promotion (A&P) spending and other cost efficiencies. Management reiterated its medium-term EBITDA margin guidance of 22%–24%.
Are HUL shares attractive after the recent correction?
Following the September-quarter performance, analysts have largely retained their positive outlook on Hindustan Unilever (HUL), with domestic brokerage firms reiterating their Buy ratings and maintaining optimistic price targets.
Motilal Oswal has reiterate its ‘buy’ rating on the stock with a price target of ₹2,150 JM Financial said it likes HUL’s execution under its new CEO but has reduced its target price-to-earnings (P/E) multiple to 40x from 45x, given the broader sector de-rating.
This translates into a revised target price of ₹2,225, down from ₹2,315 earlier, while retaining its Buy rating.
Axis Securities upgraded the stock to Buy following the sharp correction in its share price, noting that the risk-reward has become favourable, although margin pressure remains a key concern.
Global brokerages Jefferies and Nomura have also maintained Buy ratings on HUL, with both seeing further upside from the stock’s previous closing price. Jefferies has a target price of ₹2,350 per share, implying an upside of 29.4%, while Nomura has set a target price of ₹2,100, indicating a potential upside of 15.7%.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
