'This recovery should be sustained': HUL CFO on consumption rebound and growth plans
From cooling inflation to consumer confidence, HUL is betting on a turnaround and a bold new chapter for its frozen treats.
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After navigating a stretch of sluggish consumption and inflationary strain, Hindustan Unilever Ltd (HUL), India’s largest consumer goods firm, is preparing for a stronger fiscal year ahead. With early signs of recovery in demand and rural sentiment showing renewed strength, the company is doubling down on investments in its core portfolio and growth categories.
“We have seen these ups and downs and in the last two years we have gone through a phase where disposable income got impacted because of high cumulative inflation and as real wage growth did not keep pace with increased inflation,” said Ritesh Tiwari, HUL’s chief financial officer, in an interview with Moneycontrol.
Tiwari pointed to several factors that are helping ease pressure on the average Indian household. “We saw that for one, overall inflation across the country, including food inflation, has come down. Second, with the repo rate stabilising and liquidity improving, mortgage interest have fallen, which supports consumption. There's also been some relief on taxation,” he said. “All of this starts adding up, especially for the mass and middle-income categories.”
Crucially, Tiwari noted that agriculture remains a key variable. “Last year we had a good monsoon, and this year the view is also firming up that it’ll be another good season. That should help drive rural demand.”
“Consumer sentiment plays a significant role in FMCG consumption,” he added. “So, with better disposable income, improving sentiment and supportive macro conditions, we believed that from the June quarter onwards, we would start seeing a consumption uptick — and the industry has, in fact, been gradually recovering. We do believe that this gradual recovery that has happened should be sustained.”
In the June quarter, HUL reported underlying volume growth of 4 percent. While modest, the company views this as a foundation for further improvement — but not a spike.
“With an improving consumption climate and the portfolio expansions which we undertook, we expect the first half of this fiscal to be better than the second half of last fiscal,” said Tiwari. “We believe that's the space we will be in, and I don't see there will be acceleration from here. What we expect is that this gradual recovery will be sustained.”
As the company prioritizes volume-led growth and competitive pricing, questions over profitability remain top of mind. Recent pricing actions in categories like tea and home care have dented gross margins. But Tiwari expects a reversal.
“The transitory cost versus price impact due to actions taken in the tea, home care and core categories like Horlicks will reverse to some extent, going forward,” he said.
“After the June quarter, we expect gross margins to improve. But we are also clear that this improvement of sequential gross margin from the June quarter will be deployed back and we'll invest back in the business across different lines of the P&L (profit and loss account),” he added.
India’s fast-moving consumer goods (FMCG) sector has seen an evolution in its competitive dynamics, with large listed players becoming more aggressive, and digital-first brands adding complexity to the mix.
“We have large Indian listed businesses with strong business models that we compete with. There are a multitude of local and regional players with very good brands and they are strong in the geography that they operate in,” said Tiwari. “We know Indian conglomerates also have now entered into FMCG, so we compete with them. And there is the D2C (direct to consumer) industry for the last five to six years.”
Despite increased competition, HUL has expanded its market share.
“We compete with all verticals and competing with all these verticals in the last four to five years, we've gained 250 bps (basis points) in turnover-weighted corporate market share,” he said to Moneycontrol.
“This share gain has happened in both inflationary and deflationary period. So that's the face of the competition and we always maintain that while we track competition, we're always more obsessed about consumers. Given the $50 per capita consumption of FMCG in India, there's enough headroom for multiple players to coexist and create value.”
Tiwari emphasized that HUL’s focus remains on market development. “Hence, the primary importance for us is that we remain consumer-focused and keep developing the market. Given where penetration and consumption is, there's very good headroom for multiple businesses to coexist and grow.”
Alongside its broader business strategy, HUL is finalizing the demerger of its ice cream division into a standalone company — Kwality Wall’s India Limited. The move, expected to unlock focused growth for the category, is progressing on schedule.
“We are trying to get the demerger and listing process completed by Q4 of this financial year,” said Tiwari. “We have engaged with many investors and have received encouraging responses. There is a shareholder vote on August 12, and after that, there are other regulatory approvals needed to complete the process.”
“The company (Kwality Wall’s India Limited) will get listed. We expect the shares to start trading by Q4FY26. However, during these two months from demerger till listing, the shares will be frozen. The entire capital table of HUL will become the cap table of Kwality Wall’s India Limited, on record date, and then the company will be listed.”
Leadership appointments are also in progress. “Once the shareholders approve the demerger, we'll start appointing the leadership. We have already identified the management representation on the board. But, more importantly, we will start appointing independent directors on the board. We will do all of that prior to listing and then we will share the information memorandum in the public domain.”
“The entire management team of the ice cream business in India that we have today will be the management team by and large, with some changes, to lead the ice cream business.”
While the corporate structure is being finalized, operational separation is underway.
