Hindustan Unilever Ltd (HUL) has projected nearly flat to low single-digit consolidated business growth for the quarter ending September 30, 2025, attributing the subdued performance to the recent Goods and Services Tax (GST) rate revisions.
The company noted that approximately 40% of its product portfolio, including items such as toilet soap, toothpaste, shampoo, and hair oil, now benefit from a reduced GST rate of 5%, down from the previous rates of 12% or 18%.
The GST adjustments, effective from September 22, 2025, have led to temporary disruptions in the sales and distribution channels. HUL reported that distributors and retailers have delayed new orders to clear existing inventory priced under the previous tax regime, resulting in postponed consumer purchases.
This transition has caused a short-term impact on sales, with the company expecting the effects to persist into October. HUL anticipates a recovery starting in November as prices stabilize and consumer demand normalizes.
In response to the GST changes, HUL has passed on the tax benefits to consumers through competitive pricing across a wide range of products. The company remains committed to supporting the government’s efforts to stimulate consumption and expects the reforms to increase disposable income and drive long-term demand across key categories.
Despite the short-term challenges, HUL views the GST reforms as a positive step for the consumer goods sector. The company expects that the transitional impact will be temporary and anticipates a rebound in growth as the market adjusts to the new pricing structure.
Analysts have expressed cautious optimism regarding HUL’s outlook. Jefferies maintained a ‘Buy’ rating on the stock with a target price of ₹3,000, citing the long-term benefits of the GST cuts despite the short-term sales slowdown. Similarly, BofA Securities retained a ‘Neutral’ rating with an unchanged target price of ₹2,840, highlighting the temporary nature of the disruptions. However, Morgan Stanley reiterated an ‘Equal-Weight’ rating, noting that the company’s recent update fell below market expectations.
On September 29, 2025, HUL’s shares experienced a decline, falling by up to 2.5% in early trading. The stock’s performance reflects investor concerns over the immediate impact of the GST reforms on the company’s sales growth. However, the broader market sentiment remains positive, with expectations of a recovery in the coming months as the effects of the tax changes dissipate.
In conclusion, while HUL faces short-term challenges due to the GST rate adjustments, the company remains optimistic about the long-term prospects. The anticipated recovery in consumer demand, coupled with the benefits of the tax reforms, positions HUL for sustained growth in the future.
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