Image Source: Business Today
The Indian FMCG sector is buzzing this morning as Hindustan Unilever Limited (HUL) dropped its Q3 FY26 earnings report. At first glance, the numbers are nothing short of a blockbuster: a massive 121% jump in net profit, reaching a staggering ₹6,603 crore.
But for seasoned investors and business analysts, the real story lies beneath the surface. While the headline figure suggests a victory lap, the core operations tell a tale of a “tough business environment” and strategic pivoting.
The Ice Cream Factor: A One-Time Windfall
If you are wondering how a legacy giant can more than double its profits overnight, look no further than the freezer. The primary engine behind this 121% surge was a massive ₹4,611 crore exceptional gain from the demerger of HUL’s ice cream business (Kwality Wall’s).
Effective December 01, 2025, the demerger created a separate entity for the ice cream unit. This accounting masterstroke provided a massive one-time boost to the bottom line, but it masks a decline in the company’s continuing operations.
HUL Q3 Earnings: Breaking Down the Revenue and Margins
While reported PAT (Profit After Tax) soared, core net profit from continuing operations fell 30% to ₹2,118 crore.
Here is the quick snapshot of HUL Q3 FY26 Performance:
- Consolidated Revenue: ₹16,235 crore (Up 6% YoY)
- Reported Net Profit: ₹6,603 crore (Up 121% YoY)
- EBITDA: ₹3,788 crore (Up 3% YoY)
- EBITDA Margin: 23.3% (Slightly down by 70 bps)
- Underlying Volume Growth (UVG): 4%
Despite the “profit paradox,” HUL managed a respectable 6% revenue growth, driven by a 4% increase in volume. This indicates that while consumers are still buying, the cost of doing business, and perhaps the implementation of new Labour Codes (which cost the company ₹576 crore this quarter), is weighing heavily on the margins.
Strategic Shifts: The OZiva Buyout and Portfolio Cleanup
HUL is not just sitting back; the company is aggressively reshuffling its cards. In a move to dominate the “clean-label” health space, the board has approved the 100% acquisition of OZiva, a brand that has gained a cult following among health-conscious Gen Z and Millennial consumers.
Simultaneously, HUL is exiting its joint venture in Nutritionalab (Wellbeing Nutrition), signaling a clear intent to focus on high-growth, high-margin premium categories rather than underperforming partnerships.
Segment Highlights: What’s Moving the Needle?
- Beauty & Wellbeing: A standout performer with 6% sales growth, led by premium hair care brands like Dove and TRESemmé.
- Home Care: Maintained its market leadership with 3% growth, though pricing actions continue to be a balancing act.
- Foods & Refreshment: Growth was led by Coffee (double-digit) and Tea, though the latter faced a deflationary commodity environment.
The Road Ahead: Is HUL Stock a Buy After the Q3 Dip?
The market reaction was swift, with HUL shares sliding over 3-4% post-announcement. Investors seem more concerned with the 30% dip in core profitability than the one-off demerger gains.
However, CEO Priya Nair remains optimistic, noting “early signs of recovery” in demand and a strategic focus on Quick Commerce, the new frontier for FMCG. As HUL pivots toward “Channels of the Future,” the next few quarters will determine if these portfolio transformations can turn volume growth into sustainable profit growth.
