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Hindustan Unilever Share Price Dips 3.7% Despite Q3 Profit Gains and Minimalist Stake Buyout

Hindustan Unilever Share Price Dips 3.7% Despite Q3 Profit Gains and Minimalist Stake Buyout
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Hindustan Unilever Limited (HUL), one of India’s leading FMCG giants, has made headlines with two significant developments. The company acquired a majority stake in Minimalist, a fast-growing skincare brand, for Rs 2,955 crore, and its impressive Q3 performance saw a 19% year-on-year (YoY) jump in profit after tax (PAT).  Source: Economic Times/Moneycontrol

Despite reporting strong quarterly earnings, Hindustan Unilever’s share price dropped by 3.7% on January 23, 2025, due to a weaker-than-expected Q3 performance. 

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Source: Moneycontrol

HUL’s Q3 Results

HUL reported impressive financial results for the third quarter of FY25 but could not meet market expectations. The company’s PAT jumped 19% year over year to Rs 3,001 crore, primarily due to a one-time gain of Rs 509 crore from the divestment of the Pureit business. Strong consumer demand across categories drove HUL’s revenue from operations to rise by 2%, reaching ₹15,195 crore.

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Source: Economic Times
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Source: Economic Times

Key Financial Highlights

Operational Efficiency:

  • Operating profit for Q3 rose by 1% YoY to ₹3,570 crore, while margins dipped by 20 basis points (bps) to 23.5%.

Beauty and Wellbeing Business:

  •  The segment grew by 1%, but volumes declined in the low single digits. Hair care achieved mid-single-digit competitive volume growth, led by strong Dove, Tresemme, and Clinic Plus performances.

Home Care Business:

  • Sales in the home care segment increased by 6%, driven by high-single-digit volume growth in fabric wash and household care.

Personal Care Business:

  • The personal care segment recorded a 4% decline in sales with mid-single-digit volume drops. Strategic actions in skin cleansing resulted in market share gains during the quarter.

Packaged Foods Business:

  • Packaged foods saw mid-single-digit growth, led by robust performance in future core and market-maker segments. Ice cream revenue remained flat year over year. Source: Economic Times

HUL Acquires 90% Stake in Minimalist

Hindustan Unilever’s acquisition of a 90% stake in Minimalist signals a calculated move to strengthen its presence in the high-growth skincare segment. Minimalist, known for its science-driven and ingredient-focused skincare products, has carved a niche in the market with its transparent and affordable offerings.

The deal, among the largest in the direct-to-consumer (D2C) segment, is set to be finalized by the end of the June 2025 quarter.

According to Tracxn, a private markets data provider, founders Rahul Yadav and Mohit Yadav hold a majority stake of 61%. Peak XV Partners follows with 27.4% ownership, while Twenty Nine Capital holds 5.6%. The remaining stake is attributed to ESOPs. Source: Moneycontrol

Reinforcing Leadership in FMCG

By expanding into the high-potential skincare market, HUL diversifies its portfolio and future-proofs its business against evolving consumer trends. The Minimalist acquisition offers HUL an opportunity to integrate the brand’s innovative approach with its extensive reach and expertise. 

What Lies Ahead?

Integration of Minimalist:

A smooth integration of Minimalist into HUL’s operations will be crucial for realizing the full potential of the acquisition.

    Innovation-Driven Growth:

    HUL’s focus on innovation, backed by its R&D capabilities, will be pivotal in driving long-term growth.

      Sustainability Goals

      Aligning with global sustainability trends, HUL’s expansion into transparent and ethical skincare through Minimalist resonates with its commitment to responsible business practices.

        Conclusion

        By tapping into the booming skincare market and maintaining strong financial performance, HUL continues to set benchmarks in the FMCG industry. HUL is strengthening its leadership by setting industry standards and adapting to challenges and opportunities with a focus on changing consumer needs.

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        FAQs

        1. What were HUL’s Q3 net profit figures?

          HUL reported a 19% YoY jump in net profit to Rs 3,001 crore in Q3 FY25, primarily driven by a one-time gain from the ‘Pureit’ business divestment.

        2. How did HUL’s revenue perform in Q3?

          HUL’s revenue from operations rose 1.79% YoY to Rs 15,195 crore in Q3 FY25, with underlying sales growth (USG) of 2% and flat underlying volume growth (UVG).

        3. What was the impact of the Minimalist Stake Buyout?

          The Minimalist Stake Buyout had a limited impact on HUL’s share price. Investors likely focused more on the company’s overall financial performance and future growth prospects.

        4. What are the key factors driving HUL’s performance?

          HUL’s performance is driven by market share, product innovation, brand building, effective distribution channels, and its ability to adapt to changing consumer preferences.

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        I’m Archana R. Chettiar, an experienced content creator with
        an affinity for writing on personal finance and other financial content. I
        love to write on equity investing, retirement, managing money, and more.

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