For a stock that once defined stability in the Indian consumer sector, the last five years have been unusually muted. While the broader market has almost doubled in this period, Hindustan Unilever has delivered barely a fraction of that return. Investors who long viewed it as the safest compounding engine in the FMCG space are now questioning why a company with such scale, legacy and brand power has not kept pace with the market’s rally.
Growth Has Slowed Far Below What Its Premium Valuation Demands
HUL’s primary challenge is not deterioration but sluggish expansion. In FY25, revenue rose only marginally to Rs 60,680 crore, barely two percent higher than the previous year. Profits improved from Rs 13,675 crore to Rs 14,300 crore, another modest increase. For a company that still trades at more than fifty times earnings and historically justified that valuation through strong volume growth and consistently high returns on capital, this muted pace stands out. The result is a disconnect between what the stock price implies and what the underlying business is currently delivering.
Key Categories Are Weak: BPC And Foods Have Either Contracted Or Stalled
Two of HUL’s biggest segments, Beauty & Personal Care and Foods & Refreshment, underline the slowdown. Personal Care revenue fell three percent in FY25, with hair care showing clear signs of down-trading and consumers shifting to niche, sharply positioned brands. Skin cleansing did see double-digit volume growth, but it was not strong enough to offset broader weakness.
The Foods and Refreshment division was flat, as health drinks, coffee and ice cream each faced pressure. Nutrition brands like Horlicks and Boost posted mid-single-digit volume declines throughout FY25, coffee volumes fell sharply in double digits, and ice cream was disrupted by uneven weather.
Premiumisation Has Lost Steam As Consumer Tastes Shift Rapidly
A major part of HUL’s earlier success came from premiumisation. The idea that consumers would steadily trade up within its portfolio. Over the last two years, this engine has slowed down. Younger buyers in skincare, personal wash and beauty are increasingly experimenting with new formats and digital-first brands instead of sticking to legacy names like Lux or Fair & Lovely. In nutrition, parents are no longer defaulting to Horlicks or Boost as newer protein mixes, energy blends and health-focused brands enter the mainstream. HUL’s dependence on Horlicks is proving challenging as the brand no longer delivers the acceleration the company had expected when acquiring the GSK portfolio.
New-Age Rivals And Regional Brands Are Taking Market Share
The landscape has become far more competitive, particularly in categories where HUL once dominated effortlessly. Digital-first brands such as Mamaearth, Plum, Pilgrim and Wow are chipping away at share in skincare, serums, body washes and premium hair care. These categories used to be core strengths for HUL and L’Oréal, but fragmentation is now visible. In beverages, Tata Consumer is outperforming while HUL’s Bru and Lipton are dealing with price corrections and shifting consumer preferences. Rising competition means HUL must spend more on defending market share, inevitably tightening margins and slowing momentum in segments that once grew smoothly.
Portfolio Dependence And Category Softness Are Holding Back Overall Performance
Even though Home Care has held up well, with Surf Excel and Rin delivering double-digit volume growth after price cuts and the segment contributing a third of HUL’s FY25 profits — it cannot offset weakness in the rest of the portfolio. Traditional mass categories have barely moved in volumes, and the aspirational pull of many legacy brands in urban India has softened.
Analysts note that while HUL still enjoys massive distribution strength and brand recall, the earlier assumption that consumers will automatically trade up within these categories is no longer guaranteed. The company hasn’t performed poorly; it has simply grown too slowly for a business priced like a superstar, especially when agile new brands are capturing the very spaces HUL once dominated.
Written by Manan Gangwar
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