Hindustan Unilever Ltd. (HUL) reported a 3 per cent year-on-year decline in consolidated net profit attributable to owners to ₹2,673 crore in Q1 FY27 from ₹2,756 crore a year earlier, despite posting its strongest underlying sales growth in 13 quarters as commodity inflation squeezed margins.Turnover rose to ₹17,184 crore, driven by 10 per cent underlying sales growth and 5 per cent volume growth, while the EBITDA margin contracted 40 basis points to 23 per cent, prompting investors to focus on profitability and the likelihood of further price increases. HUL shares fell 6.99 per cent to ₹2,022.70 on Tuesday.The reported profit decline largely reflected a one-off tax credit in the year-ago quarter. Profit before exceptional items rose 9 per cent to ₹2,731 crore as the FMCG major pivots from a pricing-led recovery to an investment-led strategy centred on premiumisation, digital-first beauty, nutrition and other underpenetrated categories.Growth remains volume-ledManagement said it increased prices by about 5 per cent during the quarter, but passed on only around half the inflation it absorbed. With input costs expected to rise another 2-5 per cent sequentially in the September quarter, calibrated price hikes, cost savings and brand investments will remain central to its strategy.“We are obsessed with volume-led revenue growth,” management said.Urban and rural demand remained broadly stable, although pressure persisted in mass soaps, where consumers are shifting to ₹10 and ₹20 price points and companies are reducing grammage rather than fully passing on higher costs. Despite this, HUL increased advertising and promotion spending to its highest level in 11 quarters, signalling a preference for market development over short-term margin protection.Investment strategyHUL has announced capital expenditure of up to ₹2,000 crore over two years, targeting premium formats, liquid products in Home Care and Beauty & Wellbeing, automation, digital technologies and a more flexible supply chain.It has also created a dedicated quick-commerce organisation to strengthen demand planning, product availability and customised supply chains for fast-growing online channels. The broader strategy is to use established brands to move consumers into higher-value categories while accelerating growth in premium products.Growth enginesHome Care remained the strongest business, delivering 14 per cent underlying sales growth and high-single-digit volume growth, its best performance in three years. Fabric Wash and Household Care both posted double-digit growth, while Vim Liquids continued to gain market penetration.Beauty & Wellbeing reported 12 per cent underlying sales growth with high-single-digit volume growth. Hair Care and Premium Skin Care both recorded double-digit growth, driven by premium offerings.Digital-first beauty is emerging as a key growth engine. Management said the business now has an annual revenue run rate of over ₹2,000 crore. Minimalist, HUL’s flagship acquisition in the segment, has reached an annual revenue run rate of ₹800-900 crore, growing 40-50 per cent year-on-year and expanding to more than 30,000 stores. The company is combining acquisitions with brand extensions such as Dove and Vaseline and global launches, including Simple, Nexxus and Liquid I.V.Foods delivered 7 per cent underlying sales growth, with mid-single-digit volume growth. Coffee and Lifestyle Nutrition recorded double-digit growth, Boost crossed ₹1,000 crore in annual turnover and Kissan Chutney continued to outperform internal expectations.Pressure pointsPersonal Care remained the weakest segment, with 4 per cent underlying sales growth driven largely by pricing rather than volumes. Persistent palm-oil inflation weighed on Skin Cleansing, while the mass soap portfolio, particularly Lifebuoy, continued to require investment. Premium brands including Dove, Pears and Bodywash, however, sustained strong momentum, with Bodywash posting another quarter of double-digit growth as HUL seeks to shift consumers from soap bars to premium liquid formats.Within Foods, tea sales softened because of an unusually hot summer and lower out-of-home consumption during the LPG disruption, though management expects the weakness to be temporary. Nutrition brand OZiva also remained under pressure as the company continues to integrate and reposition the business.HUL retained its view that FY27 will be stronger than FY26 despite ongoing commodity inflation. The next two quarters will depend on input-cost trends, the monsoon, energy and palm-oil prices, and the ability of premium categories to offset weakness in soaps and personal care. The sharp decline in the share price suggests investors want clearer evidence that these growth engines can sustain earnings while protecting margins.Published on July 28, 2026