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Growth aspirations intact; resetting to gather momentum

* At Hindustan Unilever's (HUL) analyst meet, management presented its "Winning in New India" (WINI) strategy, positioning the portfolio to address fast changing consumer preferences (particularly among the youth). HUL clocked a turnover of INR638b in FY26, with 21 brands surpassing the INR10b mark. Over 90% of the turnover originated from categories where it holds the #1 position. More than 85b packs are sold annually and reach 9m+ outlets. One or more HUL brands are used by 9 out of 10 Indian households.

* HUL is gearing up well for growth acceleration, undergoing five reset actions comprising

1) SASSY (scientific, aesthesis, sensorial, said by others, youthful) brand transformation framework

2) sharper resource allocation behind fewer bigger bets

3) acceleration of selected growth pockets

4) a dedicated Quick Commerce organization

5) a unified India operating model. While turnover doubled, EBITDA surged 3x and operating cash flow jumped 4x between FY14 and FY24 (including the Ice Cream & GSK acquisitions). However, turnover was broadly flat between FY24 and FY26 (ex-Ice Cream), providing the backdrop for the current reset. Underlying sales growth has improved sequentially over the last few quarters.

* Management highlighted that the growth is increasingly being concentrated in specific consumer and channel pockets. It indicated that small towns are growing at 2x the all-India rate, Quick Commerce is likely to reach an INR2t market by FY28, Vitamins & Dietary Supplements growing at 2.5x the global rate and India having ~500m social media users. HUL is thus managing India as discrete ‘growth cells’ across big cities, small towns, and Tier 4/rural markets (~70% of India’s population), segmented into Power Spenders, Premiumizers, and Democratizers and overlaid with channel-specific behaviors.

* HUL remains focused on competitive, volume-led revenue growth and expects FY27 growth to be better than FY26. The medium-term EBITDA margin range has been indicated at 22-24% vs. the earlier guidance of 22.5- 23.5%. HUL expects to generate cumulative “fuel for growth” equivalent to 500bp of sales over the next five years through premiumization, operating leverage, the Future Savings Lab, and AI-led media effectiveness, with the entire quantum being redeployed behind growth. Capex intensity is expected to rise from ~2% of turnover historically to ~3%, with >85% directed towards growth and savings initiatives.

* The renewed strategy is expected to address the growth challenges that have persisted over the past few years. The growth model is being reset towards volume growth and market development. Moreover, continued sequential improvement in sales growth, alongside share gains, offers early validation.

* HUL continues to focus on driving volume-led revenue growth. Despite concerns around rising crude prices and macro volatility, HUL believes it is well positioned to navigate the environment through commodity hedges, accelerated cost-saving initiatives, portfolio transformation strategies, and stronger omnichannel capabilities. Management remains optimistic about delivering better performance in FY27 vs FY26. We reiterate our BUY rating on the stock with a TP of INR2,400 (based on 40x on Sep’28E EPS).

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