September Quarter Update Impacted by GST Rate Rationalisation
Hindustan Unilever Limited (HUL) issued a weaker-than-expected business update for the September 2025 quarter, citing temporary disruptions linked to the recent Goods and Services Tax (GST) rate rationalisation.
The FMCG major highlighted that about 40% of its portfolio, covering key categories such as toilet soaps, toothpaste, shampoos, and hair oils, is now subject to a reduced GST rate of 5%—down from the earlier 12–18%.
Short-Term Disruptions Due to Inventory Transition
The GST revision led to a postponement of trade orders, as distributors and retailers awaited new stock at revised prices. Existing inventory with older pricing had to be liquidated first, leading to lower orders across the portfolio and weaker pantry stocking by consumers.
HUL noted that this effect weighed on September sales and is expected to linger into October, until channel inventories normalize.
HUL’s Commitment to Passing on Benefits
The company reaffirmed its commitment to passing GST benefits directly to consumers, effective September 22 onwards, through competitive pricing and enhanced value offerings across its wide product range.
“This move is expected to boost disposable income and support long-term demand growth in core FMCG categories,” the company said in its filing.
Business Outlook
As a result of the transitory disruption, HUL expects consolidated sales growth for the quarter to remain flat to low single digits. However, the company emphasised that this is a one-off impact, with recovery expected from November 2025 as prices stabilise and demand normalises.
HUL further added that its portfolio transformation initiatives and rising consumer spending power would underpin growth momentum going forward.
Summary
- Impact Driver: GST rate cut to 5% on ~40% of HUL’s portfolio.
- Short-Term Effect: Weaker September sales, with impact likely to extend into October.
- Cause: Inventory clearance at old prices and delayed trade orders.
- Quarterly Guidance: Growth expected to be flat to low single digits.
- Recovery Outlook: Normalisation and demand recovery projected from November 2025 onwards.
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