04 - 05 - 2026

HUL turnaround is real as rural demand revives: ICICI Securities

Our Research Bureau
Mumbai, May 4, 2026

Hindustan Unilever’s (HUL) turnaround is real as the Indian consumer goods giant has signalled a definitive recovery in rural markets and volume growth, according to a report by ICICI Securities.

The brokerage has maintained an “ADD” rating on the stock, citing a structural shift in the fast-moving consumer goods sector where green shoots in the hinterlands are finally translating into sustained performance.

After several quarters of tepid demand, HUL reported a 2% underlying volume growth for the quarter ending March 2026, supported by a significant narrowing of the gap between rural and urban growth rates. Rural markets have shown resilience, and for the first time in two years, volume growth is outpacing value growth in several core categories.

The brokerage noted that the easing of consumer inflation has restored purchasing power in smaller towns and villages, which account for a substantial portion of HUL’s revenue.

The brokerage highlighted HUL’s ability to defend its margins despite volatile raw material costs, with the gross margin expanding by 350 basis points year-on-year due to a strategic focus on premium products and cost-optimisation programmes.

EBITDA margins remained healthy at 23.4%, reflecting strong execution in the Beauty and Personal Care segments, while the Home Care segment continued to lead growth, particularly in the premium laundry category. Additionally, HUL’s “Reimagine HUL” initiative has digitised over 1.3 million outlets, enhancing supply chain efficiency.

Challenging local competition

While local competition remains a challenge in the tea and detergent categories, ICICI Securities believes HUL’s scale and distribution network provide a significant moat. The brokerage expects the company to maintain a steady growth trajectory as the monsoon outlook remains favourable, further bolstering agricultural incomes. The report suggested that the worst of the volume stagnation is likely behind the company, though it cautioned that intense competition from smaller, regional players could limit aggressive price hikes in the near term.

ICICI Securities has set a revised target price for HUL, reflecting its confidence in the company’s ‘Winning in Many Indias’ strategy. The brokerage concludes that while the stock trades at a premium compared to its peers, the stability of its earnings and the emerging rural tailwinds justify the valuation, positioning HUL as a core portfolio holding to capture the next leg of India’s consumption story.