Good day and welcome to the Hindustan Unilever Limited conference call for the results of quarter ended 30th September 2025. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Yogesh Mulgaonkar, Head of Investor Relations and Head of Finance, Personal Care. Thank you and over to you, sir.
Thank you, Michelle. Good evening, everyone. Welcome to the conference call of Hindustan Unilever Limited. Wishing you and your loved ones a happy and a prosperous Diwali. This evening, we will be covering the results for quarter ended 30th September 2025. On the call with me is Priya Nair, CEO and Managing Director; Ritesh Tiwari, CFO, and Niranjan Gupta, CFO designate. We will start with prepared remarks from Priya and Ritesh. We expect this to take around 30 minutes, leaving us approximately an hour for the Q&A session. We will look to end the call by 5:30 P.M. Before we get started with the presentation, I would like to draw your attention to the safe harbor statement included in the presentation for good order's sake. With that, over to you, Priya.
Good afternoon, everyone. Thank you for joining us on the call today. Wishing you and your loved ones a joyful and prosperous Diwali. Let me begin with an update on the operating context and an overview of our performance in the quarter. I will also take this opportunity to share some of my reflections on my first 90 days as the CEO of HUL and outline the key priorities that will guide us as we chart the course for our company's next phase of growth. Subsequently, Ritesh will take you through our in-quarter results and conclude with the outlook. At an MAT level, demand growth trends, as per Nielsen, remain stable, with both rural and urban contributing to this. This past quarter, the macro-economic environment was shaped by three factors. The most significant of this was the government's recent GST reform.
This is a particularly encouraging development centered around the rate reduction and tax structure simplification. It is expected to have a positive impact by enhancing disposable income, thereby laying the ground for stronger consumption trends. I will elaborate on both the immediate and long-term business implication of these reforms in the next slide. Meanwhile, prolonged and intense monsoon conditions across several regions disrupted supply chains and have temporarily dampened demand. We are also closely monitoring and evaluating the impact of this excessive rainfall. Lastly, commodity trends remain divergent throughout the quarter, with inflationary pressures persisting in palm oil and S&P, while tea and crude oil prices trended downwards. Collectively, these dynamics create an operating backdrop that demanded agility and resilience. Despite these short-term challenges, the underlying momentum from structural reforms and lower food inflation continues to present meaningful opportunities for sustained growth in the long term.
The recent GST rate reforms have directly benefited 40% of our portfolio, which has now moved to the 5% GST slack. Consequently, nearly half our portfolio is now covered under the 5% GST bracket. In response to the rate change, we acted with agility, implementing pricing and grammage interventions across more than 1,200 SKUs. We ensured that we passed on the entire benefit of this GST rate reduction to the consumers. To ensure a smooth transition, we extended the comprehensive support to our trade partners, facilitating pipeline stock liquidation. We also ensured clear and consistent communication to trade partners and consumers to minimize market disruption. From a long-term perspective, these reforms are a welcome move. By enhancing affordability, they are expected to boost disposable income, uplift consumer sentiment, and unlock meaningful opportunities for premiumization across categories.
This aligns well with our strategic focus of driving volume-led growth and expanding our premium offering. These reforms will serve as a structural growth enabler, reinforcing our long-term value creation agenda and positioning us well to capture emerging demand tailwinds. However, in the short term, these changes led to transitory disruptions across trade channels to clear old price inventory and resulted in a postponement of orders due to anticipated new pricing. Additionally, consumers delayed pantry replenishment in expectation of lower shelf prices. These factors, coupled with pricing volatility arising from multiple prices in the market, have resulted in a short-term impact on sales during the quarter. In this backdrop, we delivered a competitive performance marked by gains in our turnover-weighted market shares. With a turnover of INR 16,061 crore, we had a 2% underlying sales growth in the quarter.
The growth was price-led, driven primarily by carry-forward pricing in skin cleansing, beverages, and skincare. EBITDA was at 23.2%, down 90 basis points year on year, in line with our stated intent to continue investing in the business. PAT before exceptional items was down 4%, reflecting the impact of a lower EBITDA and a decline in net financing income stemming from our strategic capital allocation decisions. Profit after tax grew by 4%, primarily driven by a one-off positive impact pursuant to the resolution of prior year's tax matters between U.K. and Indian tax authorities. From a first-half perspective, we delivered a USG of 3%, led by 2% underlying volume growth. EBITDA stood at 23%, down 110 basis points year on year, in line with our previous guidance. PAT BAI declined at 4%, while PAT grew 5%.
Considering our performance in the first half, the Board of Directors has declared an interim dividend of INR 19 per share for the year ending 31st March 2026, translating to a total payout of INR 4,464 crore. As I complete my first 90 days as the CEO of Hindustan Unilever , I have had the opportunity to engage deeply with our consumers, customers, and our people. HUL is the largest and one of the most loved FMCG companies in the country for a reason. Our strengths are reflected in our performance: competitive, resilient, and consistent. HUL has consistently maintained market leadership, holding the number one position in more than 85% of the business. The leadership is in the result of our portfolio that has been built with rigor across demand spaces and price tiers, designed to serve every Indian household.
We have built 19 brands with an annual turnover exceeding INR 1,000 crore. This scale is powered by a culture of deep consumer intimacy. With over 80 billion consumer interactions annually, our insights infrastructure enables us to anticipate evolving needs and innovate with precision. We have successfully leveraged Unilever global R&D capabilities to make markets from hair c onditioners to home care liquids to face moisturizers. For decades, we have been at the forefront of market development, driving innovation and creating categories in the country. Our execution engine ensures that these innovations reach consumers at scale. Our sales network spans across 9 million stores, covering circa 95% of value-weighted distribution, enabling us to reach 9 out of 10 households in the country. At the heart of all of this is our talent. People are at the core of HUL.
Our ability to attract, develop, and retain top-tier professionals is one of the greatest competitive advantages and a key enabler of our future growth. As we look ahead, we remain steadfast in our commitment to driving volume-led growth, shaping future-ready categories, and delivering enduring value to all our stakeholders. A lot of what we have already been doing has strengthened our business and empowers us to act with agility and precision. We will continue to build on it while adapting to changing consumer trends and shopping behaviors, laying the foundation for the next era of transformative growth. Let me now outline the four priorities that will enable us to continue delivering volume-led profitable growth. The first pillar focuses on consumer segmentation. In response to the evolving consumer dynamics, we will radically sharpen our consumer segmentation.
With our portfolio of brands that straddle across the price pyramid, we will refine our strategies on brand, channel, and media choices to target each of these distinct consumer cohorts of power spenders, premiumizers, and democratizers. The second pillar is centered around elevating brand desirability by boldly modernizing our core brands and scaling our premium portfolio. We will reimagine our core brands, making them more modern, contemporary, and youthful. We will do this with renovations on our core and by driving premium innovations. Third, we already have an exceptional frontline marketing and sales engine, and our focus is to accelerate future-proofing of these capabilities. We will drive more social-first demand generation to enable brand discovery online. Among channels, we are accelerating our footprint in DCOM, including quick commerce, and we will continue to allocate more resources to these fast-growing channels.
We will continue to evolve general trade with more focus on specialist stores like cosmetic stores and chemists. Our fourth pillar focuses on reshaping our portfolio by accelerating in high-growth demand spaces. Based on market readiness, we will invest disproportionately to take a few of these demand spaces to scale and develop the markets in India. These are our key priorities as we refine our roadmap for the organization. I look forward to engaging further and sharing detailed plans in due course. I will now hand over to Ritesh to take you through our in-quarter results in detail.
Thank you, Priya. Good evening, everyone. Wishing you and your loved ones a fabulous Diwali filled with joy, light, and prosperity. I will now share a detailed overview of our quarterly performance, followed by a review of first-half results before concluding with our outlook. Priya has already briefed you on the macro-economic backdrop for the quarter and its implication on our portfolio. In this context, we have delivered a competitive performance with an underlying sales growth of 2%. Gross margin at 50.9%, almost flat year on year. In our previous quarterly update, we had highlighted gross margin dilution arising from a transitory price versus cost gap as we invested to offer a competitive price-value equation to consumers. On a sequential basis, our gross margin has seen 130 bps improvement as this transitory price versus cost gap has moderated.
We have stepped up investments in our brands and business, resulting in a year-on-year increase of 80 bps in our A&P spends. As a result, EBITDA margin at 23.2% saw a year-on-year dilution of 90 bps. Profit after tax before exceptional items declined 4%, while profit after tax grew 4%. I will explain the underlying reason for this difference later in the presentation. Coming to our segment-based performance for the quarter, home care, our largest segment, delivered a competitive performance with mid-single-digit volume growth on a strong base of high single-digit growth. The volume growth for the quarter translated to a flat USG on account of price reductions taken in prior quarters. As mentioned previously, this price reduction reflects our strategic actions to maintain a competitive price-value equation and to pass on commodity-led benefits to consumers with more than 10% deflation observed in crude oil.
Fabric wash delivered mid-single-digit UVG, driven by double-digit volume growth in the liquids portfolio. Fabric conditioners delivered double-digit growth in the quarter and continued its innovation-led premium journey with the launch of an all-new Comfort Perfume Deluxe range, a premium collection inspired by award-winning fragrances. Household care maintained its trajectory of double-digit UVG, led by an outperformance in the liquids portfolio, while dishwash baths recorded a high single-digit volume growth. Beauty and well-being delivered 5% USG, driven by skincare and health and well-being. Hair care witnessed a decline in turnover, being impacted by GST rate rationalization across 90% of its portfolio. However, we continue to strengthen our market leadership, widening our gap to the nearest competitor. We remain focused on enhancing the relevance of our core brands, reinforcing their resonance with changing consumer dynamics. For instance, during the quarter, Sunsilk refreshed its identity and underwent a relaunch.
The new packaging with holographic elements and identity signals Sunsilk's shift towards being a science-backed, future-ready brand while keeping alive its vibrancy and optimism. Skincare, including color cosmetics, grew in high single digit, driven by continued momentum in Future Core and Market Makers portfolio. Vaseline and Lakme led growth for the category. Our six big bets continue to deliver strong double-digit growth. Channels of the future sustained its double-digit competitive growth momentum with stepped-up activations ahead of the festive and winter season. Health and well-being maintained its strong triple-digit growth trajectory, fueled by a portfolio of superior science-backed products bolstered by on-trend innovations. One such example is the launch of OZiva Phyto Ceramides + Collagen Builder , an ingestible skincare supplement. Designed to support hydration, barrier repair, and collagen synthesis, the product unblocks and unlocks new growth opportunity in the beauty from within categories.
More than 90% of the personal care portfolio underwent a GST rate transition in the quarter, which has had a transitory impact on the underlying volume growth. As a result, personal care turnover growth was flat. Moving to skin cleansing, overall turnover growth was flat. While the category had carried forward pricing benefits, overall growth was impacted with GST transition and continued effect of pricing on category consumption. At an aggregate level, we continue to strengthen our competitive position. Our strategic focus on premiumization and market development continued to yield strong results. This translated into double-digit growth in premium soaps, driven by both price and volume. Following the successful relaunch of Dove, we further strengthened our premium offerings this quarter with the relaunch of Pears and expansion of Lux International soap range.
Infused with skincare actives such as glutathione and vitamin E, the Lux International soap range will elevate daily skincare rituals while providing a soothing sensorial experience. Oral care witnessed a marginal decline in turnover, led out of transitory GST impact. Close Up delivered low single-digit growth. Coming to foods, foods delivered a USG of 3% with low single-digit UVG. All categories within the portfolio, except tea, which was already at 5%, have undergone a rate revision of GST. Our beverage portfolio, comprising of tea and coffee, delivered double-digit growth, led by strong performance in channels of the future. Tea grew in high single-digit, driven by price and volume. Coffee continued to deliver double-digit price-led growth. Lifestyle nutrition sustained a positive UVG during the quarter, supported by a positive mix. This reflects early signs of consumer uptrading, driven by packed price architecture interventions implemented in prior quarters.
However, overall turnover declined impacted by negative pricing. We remain focused on driving consumption growth for this category. While the GST rate reduction led to short-term impact, it is expected to act as a catalyst for demand recovery in the long term of this business. After the successful launch of Boost Protein, we expanded our protein offerings with the launch of Horlicks Pro Fitness this quarter. Horlicks Pro Fitness is a scientifically formulated meal replacement solution with 60% less calories compared to an average Indian meal. Packaged foods delivered a muted performance this quarter. Mayonnaise and international sauces range continue to deliver double-digit growth. This business was also impacted, as I called it earlier, by GST transition. Ice cream business declined year on year, impacted by extended monsoon in addition to GST transition. As you're aware, the ice cream demerger process is currently underway.
We expect to complete the demerger by December, with the listing anticipated in quarter four of financial year 2026, subject to necessary regulatory approvals. Moving on to the summary of our performance for September quarter 2025, I've taken you through top line growth and margin. The year-on-year moderation in other income primarily reflects reduced cash reserves post special dividend payout and Minimalist acquisition, alongside softer interest rate trends. Exceptional items are higher year on year on account of one-off impact from resolution for certain tax matters between the U.K. and Indian tax authorities for previous years. As a result, PAT grew 4%, while PAT BEI declined 4%. Effective tax rate was 24.5% after taking into consideration prior period adjustments and excess income. Excluding these, the effective tax rate was 26.7%.
Coming to the summary of our performance for the first half of financial year 2026, 3% USG translated to a 4% turnover growth, including Minimalist. The Minimalist brand has delivered strong double-digit growth for the period. EBITDA margin at 23% was down 110 bps year on year and is in line with our guidance. Exceptional items include one-time benefit recognized in September quarter, as previously outlined in the presentation. Lower tax expense is on account of re-estimation of prior year tax provision, as explained last quarter. As a result of these one-offs, profit after tax grew 5%, while profit after tax before exceptional items declined 4%. Effective tax rate was 20.5% after taking into consideration tax adjustments and exceptional income for the first half. Excluding this, effective tax rate was 26.6%. Moving to our near-term outlook, the GST-related impact continues through October.
We anticipate normal trading conditions starting early November once prices stabilize, paving the way for a gradual and sustained market recovery. While the increase in disposable income is a positive structural driver, we expect its benefit to manifest gradually in the demand trajectory rather than through an immediate acceleration. If commodity prices remain where they are, we expect a low single-digit price growth. Overall, we expect growth of the second half of this financial year to be better than the first half. We remain vigilant about the evolving impact of weather patterns, particularly as the winter season approaches and the effects of a prolonged monsoon begin to play out. We remain firmly committed to investing behind our business, confident that this continued focus will unlock sustained growth.
Coming to EBITDA margin, the ice cream demerger is expected to result in an improvement of 50 bps- 60 bps to the reported margin as ice cream business operates at a margin lower than the actual average. Our current near-to-mid-term guidance is 22%- 23%. Hence, everything else being equal, ice cream demerger at 50 bps- 60 bps to this guidance. We remain committed to executing our strategy with sharp focus and agility, putting priority on competitive volume-led growth across the portfolio. With this, we conclude our prepared remarks. Now, this is my last earnings call in my current role as CFO of HUL . Before I hand over the baton to Niranjan and embark on my next chapter at Unilever as Global Head of M&A, Treasury, and Ventures, it has been an immense honor and a deeply fulfilling experience to lead this remarkable organization as its CFO.
I wanted to take a moment to personally thank you all for the trust, confidence, and support you have extended to HUL and to me over the last five years. Your continued engagement and critical thinking has been invaluable to me. With this now, let me hand it over back to Priya.
I would like to take this opportunity to extend my heartfelt thanks to Ritesh for his outstanding leadership at HUL over the last five years. He has steered the company through some of the most challenging and transformative periods, including the COVID-19 pandemic and subsequent inflation-deflation cycles, with resilience and strategic foresight, enabling the company to evolve at a fast pace while consistently centering market leadership. We are deeply grateful for his contributions and the strong future-fit capabilities he has built for the organization, and we wish him the very best for his new role. I'm also very pleased to welcome Niranjan Gupta back into the organization. After an impactful 20-year tenure across HUL and Unilever, Niranjan pursued external opportunities, most recently serving as the CEO of Hero MotoCorp .
His proven track record and rich experience across diverse industries will be invaluable as we continue to drive transformation and accelerated performance. I am confident that he will play a pivotal role in supporting me towards the next phase of our growth. Niranjan, I would now like to invite you to share a few words. Over to you.
Thank you, Priya. Good evening, everyone. Firstly, let me start by wishing everyone a very happy festive season to you and your families. I'm honored to be back at HUL , a company that continues to inspire with its consumer focus and portfolio of brands that earn huge love and respect. I'm looking forward to working with Priya and team to build on our strong foundation and shape the future path together to drive accelerated growth. Looking forward to connecting with you all over the course of the coming months.
Thank you, Priya, Ritesh, and Niranjan. With this, we now move to the Q&A session. The Q&A session today will be led by Priya and Ritesh. We request you to kindly restrict the number of questions to a maximum of two at a time. In case you have any further questions, please join the queue again. In addition to the audio, our participants have an option to post the questions to the web option on your screen. We will take these questions just before the end. With that, I would like to hand over the call back to Michelle to manage the next session for us.
Thank you very much, sir. We will now begin with the question and answer session. Anyone who wishes to ask questions may please press star and one on their touchstone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking our questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Vivek from Jefferies. Please go ahead.
Hi, good evening. Am I audible?
Yes, Vivek, you are on.
Okay, hi. Hi, team. Priya, first question to you. You articulated your four-pillar strategy. Let's say from a company standpoint, when you look at from a product segment perspective, can you just talk about areas that you think need attention based on your assessment?
Thank you, Vivek. I'll go category by category to just talk a little bit about our performance. Let me start with home care. We have an extremely competitive performance in home care overall with mid-single-digit UVG. Our job in home care has always been to continue to premiumize the market, and this is a continued job to be done, and we are on a good trajectory on home care overall. Of course, our revenue growth, given the deflationary commodity, is flat, but overall a good, solid, competitive performance in our home care business. In household c are, we have a double-digit UVG led out of dishwash, and again, we need to continue to drive dishwash liquids and therefore develop the markets in home care . That's our job in home care . This is 40% of our business. We continue to drive premiumization and market development in a ubiquitous category in the country.
Let's now come to personal care. In personal care , we are seeing a quarter-on-quarter improvement in our performance and our competitiveness. Of course, this quarter, as Ritesh mentioned, it is impacted by GST, but what all goes well for HUL is the double-digit growth of premium soaps, and this is an area, again, we will continue to focus. Here again, liquids and body wash is under 2% penetration in India, and our job as the market leaders of soaps is to grow and develop the markets towards liquids, and that is where we will double down and focus. Coming to beauty and well-being, we have grown at 5% this quarter. This is made up of a good performance of single-digit growth on skincare. We've had very good winter loading into the September quarter.
OZiva has delivered triple-digit growth this quarter, and you heard Ritesh talking about Minimalist, which also continues to deliver. In hair care , we are the market leaders. Again, here, our job is to continue to premiumize the category and grow the market from just hair cleansing into hair care and really develop the market. That, in a summary, is on beauty and well-being. Looking at foods and our nutrition business, in foods and beverages, we have again grown double-digit. Here, our focus once again is on premiumization given the nature of the category. Again, the commodity today is deflationary, and we will do the right things to ensure we stay competitive in the beverages segment. In Horlicks, we've seen some early green shoots. There's still work to do here on the brand, but it's in an excellent space of wellness and nutrition, which is extremely important in India.
It's a growing demand space, and we will double down here. We've already launched our RTDs in Horlicks, and as Ritesh mentioned, the Pro Fitness range, and this is an area of work to do. There's still work to do on Horlicks, and we will continue to do this going forward. That, in a nutshell, Vivek, probably explains to you how I'm thinking across categories.
Got it. Got it. Priya, slightly from a longer, let's say from a medium-term perspective, you mentioned about the quarterly trends and how things are shaping up. The external world view is that, at least from our side, that beauty and foods should require more attention just purely because the performance had been somewhat okay over the last few quarters. Do you concur with that view? A follow-up to that is basically, from a premiumization perspective, you have done well. Do you think, how do you think about the digital-first competition, as well as is there a case to focus much more at the, let's say, the mid of the pyramid and the bottom probably? Not bottom, bottom as in, but yeah, something below mid.
Yeah, I think let me break this down into multiple parts, Vivek, if I could. Let me start with where you ended possibly. Actually, that was the first pillar of what I've talked about, which is the radical segmentation we would like to do of consumers. If you look at the consumers in India today, we are seeing an opportunity to be more radical in our segmentation of consumers. Our spenders at the top, these are about 60 - 80 million consumers at the top of the pyramid, premiumizers in the middle, and the democratizers at the bottom of the pyramid. With our price brand pyramid, we have the opportunity to grow in each of these segments and tailor strategies, channel, brand, price, media strategies to deliver against each of these consumer cohorts. That will be an area of work that we will do.
Really, our right to win in each of these, given how we straddle the pyramid, is extremely high. You're absolutely right in what you're referencing, Vivek, that it is not just in urban India, but also our rural markets where we have the opportunity. There is a huge transformation taking place in rural in the country, and we will double down behind growing across the price brand pyramid of the country. Ritesh, if you want to answer the second part of your question.
Vivek, does that answer the question?
Yeah, yeah, absolutely, it does. That was my first question. With your permission, second question for Ritesh and two parts. On GST bit, Ritesh, you mentioned about October will continue to see the impact, but the destocking ends second quarter, and October should also unwind in the next quarter itself. Is that a fair assumption?
Yeah. GST, as you mentioned, Vivek, that overall as the change started to happen and our announcement happened, clarity emerged. September month and October both, A, because of what happened to trade in terms of destocking. B, consumers were very choiceful and were hoping to see lower prices on the shelf before they start loading in their own pantry. Third, the fact is there will be a point of disturbance for a month or so because there will be more demand prices in the market. Old MRP will be sold at new GST and new MRP, old grammage and new grammage. This is the disturbance that we spoke about, which will end up being in the trade and in the business till early November. Post that, we expect prices to stabilize and normal trading conditions to come back. Now, what happens in terms of trade when they destock?
We've known in the past it takes time for them to go back to the normative stocking levels. It requires effort for that to happen, and we have put on full plans for that to get taken care of.
Okay. As a follow-up to that, can you quantify, Ritesh, what was the impact on margins due to trade support in this quarter? Do you expect the same to continue in the third quarter as well?
Yeah. We did lean in with trade support in the quarter. Overall, at a net level, you've seen very fast we had improved our gross margin by 130 bps sequentially. That was one of the arsenals that we had deployed to support trade pipeline to be liquidated. Going forward, we don't expect further margin impact, Vivek, coming in from GST transition. Of course, the entire GST rate reduction is cost neutral to us. It's something which government has given change, and hence no cost implications on us. We don't expect any margin implications coming in. To the extent there was a net impact between overall price that we had given in the market, the improvement in gross margin more than took care of that in the quarter.
Hence, at net level, when you saw EBITDA for the quarter declining by 90 bps, summary of summary, the 80 bps increase year on year on A&P that we did is what ultimately flew in the bottom end of the P&L.
I see. Got it. Thank you and wishing you all the very best, Priya, Ritesh, as well as Niranjan.
Thanks. Thanks, Vivek. Appreciate it.
Thank you.
Thank you. The next question is from the line of Abneesh Roy from Nuvama . Please go ahead.
Yeah, thanks. My first question is on the demand side and the GST impact. We have seen in cars, for example, the GST-related cuts led to huge buying by the government. Of course, that's a deflationary demand. My specific question is, once everything normalizes, say, start of November, excluding the grammage increase, which we'll say happened in the lower unit specs, do you see customers actually buying more FMCG in terms of volume? Second is, when I see the populist programs running now in every state, Bihar is going into elections, INR 10,000, for example, being given to every woman. Do you see actually that FMCG consumption also benefits wherever this happens? Frankly, it is happening in almost every state where elections are happening.
If you could comment, the INR 45,000 crore GST stimulus program, do you think eventually it will lead to uptake in terms of FMCG consumption, excluding grammage increase, and second, the populist programs from the state government?
Yeah. No, thanks, Abneesh. Let me pick these both questions. First, GST, and you rightly mentioned that the short term there is impact in the months of September and October. From early November, as prices stabilize, we should start seeing normal trading conditions. Now, overall, we know that FMCG consumption has always benefited from two things: net disposable income, number one, and number two, improved consumer sentiment. Both of these elements will be supported by this GST transformation, which government has done. In our view, this will absolutely augur well for consumption. This will incentivize further our journey towards making the portfolio more premium. It will incentivize consumption, and hence, overall, it's in a positive territory. We are very clear that this will be one more parameter that will get added to everything else that we had. We had monetary easing. We had direct tax benefit earlier.
We have seen inflation, including food inflation, meaningfully coming down. This GST change just adds to that to help us improve in the macro-economic conditions and trading conditions. That's one positive and thumbs up on that. Second, elections, our reflection always has been these are transitory in nature, where in a few states or even nationally, when an election happens, we've seen that impact comes more from structural reforms that post-election government brings in rather than some amount of, let me say, work which happens during election. You quoted a couple of examples as part of that. Any structural reform done is what typically helps consumption rather than any short-term measure during elections which happens.
Sure. One follow-up question to the demand side only. In Q2, two large FMCG companies have come out in terms of results. Nestlé has not called out GST impact in any of their communications, and they have actually shown the numbers of 10% + kind of sales growth. My specific question here is, has the GST-related destocking been more in rural areas for you and for the sector? Nestlé is almost 75% urban. Is that helping them? Is that something common to you and to the sector that urban, the GST destocking has been on the lesser side?
Yeah. Let me help Abneesh answer this from a little different lens than urban rural only. I think you might appreciate it better. 40% of the business benefited from GST transition, and hence, in short term, it got impacted with the transition that I spoke about. What are these businesses? Skin cleansing, hair care, packaged foods. Now, we know, for example, hair care. Hair care had a pretty strong trajectory of growth in our business, and we consistently spoke about it. This quarter, the business declined because of the GST transition impact. Business is competitive, and we further gained shares. Personal care, personal care over the last few quarters has gained momentum and has done competitively better and further gained shares. The personal care business in the quarter was impacted with GST transition. We have seen that this 40% business got impacted by the GST transition.
As I mentioned, early November onwards, we expect normal trading conditions for this 40% of the business. Second, 20% business sits between skincare and tea. Outside of this, no confusion. We know tea already sits at 5%. Skincare was never spoken about as being benefited by GST. These businesses had no impact of GST. We grew both these businesses in high single digit, including support from volume growth. The third component of the business, 40%, is home care . Home care grew competitive mid-single-digit volume on the back of high single-digit volume in the same period last year. Pretty strong volume growth has got delivered in the quarter. This volume growth of mid-single-digit translated to a flat UST because of the price cuts that we have done, both in response to crude oil, which is year on year 10% down, and in response to competitive pricing actions.
We have virtually mid-single-digit negative pricing in home care . We will start to get this lapping in the base in a quarter or so, but that has been the implication. To my point, every business is different. I just gave you this 40/20/40 to appreciate how the business has been run in the quarter and which parts of the business have seen impact and which parts of the business which are not impacted have grown very differently.
Ritesh, one quick follow-up on the restocking and destocking. When they normally come back, say, in early November, do you expect a reasonable restocking also to benefit you? There is a lot of perishable demand stock out, so the restocking benefit will be much lesser than the destocking loss?
Yeah. This is what I was trying to explain to Vivek as well earlier. Now, in FMCG, typically, we have four to six weeks, depending on the category, trade pipeline. You've seen whenever trade pipeline comes down, and we experience this at length, Abneesh, when the inflationary period happened and when the deflationary period happened, it does not automatically within a week or so come back. It takes effort for us to ensure that these inventory levels, stock levels, come back to its normal range of four to six weeks' time. The next couple of months, this is the exact focus that we will have.
As the prices will stabilize early next month in November, our focus will be to ensure that shelves are filling back, which is more easier in a modern trade and e-commerce and more amount of work to be done at the length and breadth of the country. When we sell to more than 9 million outlets, it's a job to be done to reinstall that four to six weeks of trade pipeline. This job takes a couple of months' time, the point I was answering to Vivek earlier.
Sure. My second question is on the margins. One is you had given the guidance of 22% - 23%. In the first half, you have met the higher end of that guidance. Is there an upside risk in H2 given fee cost has corrected and PFAD also there could be some lag benefit? It is quite volatile. I understand that. Is there an upside risk? Media channels were carrying this that the margin guidance by HUL has been upgraded. You clarified on that bit that there was an ice cream impact of 50 bps- 60 bps. If you could clarify because ice cream merger, demerger is going to be at the year end. When does that benefit happen? That happens in FY 2027, essentially, 50 bps- 60 bps?
Yeah. Currently, where we are with the ice cream plants, Abneesh, we expect the demerger to happen in December quarter. When I say demerger, which means if everything goes as per plan and with all regulatory approvals, when we declare our results for December quarter, it will be excluding ice cream, and ice cream business will be shown as a discontinued business. Hence, margins excluding ice cream will start getting reflected in our December quarter results. This is where we are with our timelines, assuming nothing changes with all the approvals in place. We expect this to be the course of the day. In March quarter, end of the financial year, we'll end up listing the company. This is a two-step process: demerger, reporting discontinued business for December quarter, and then listing the business in March quarter. Again, as I mentioned, subject to all necessary regulatory approvals.
As we speak, we are on track on this timeline. Once this happens, when we report our results for December quarter, it will be excluding ice cream business. Ice cream, as we had called out even earlier, is roughly a 3% odd of our business, and the business makes low single-digit margin. I had called out even earlier that this year, given the impact of monsoons, given the impact of investments, in fact, we have a little lower compared to that margin. Hence, we expect once we have results declared and reported excluding ice cream, on an average, annually, we should see 50 bps- 60 bps improvement in our reported EBITDA margin, which is why we clarified that we're not changing our margin guidance. It remains 22% - 23%. You're right, within that margin guidance, this quarter we operated at higher end.
Some other quarter, it could be a different part of the range we'll end up operating. The point is, on top of this range of 22% - 3%, we will see a 50 bps- 60 bps increase in our reported margin once ice cream demerger happens from December quarter onwards.
Sure. Understood. Thanks. That's all from my side. Thank you.
Thanks, Abneesh.
Thank you. Before we take the next question, may we request all the participants to kindly limit their questions to only two? Should you have a follow-up question, please rejoin the queue. The next question is from the line of Arnab Mitra from Goldman Sachs . Please go ahead.
Yeah, hi, team. Thanks for taking my question. My first question actually is to Priya. You mentioned about your reflections in the first 90 days. Any thoughts on is there a trade-off between growth and margins as HUL looks into the next few years? In the sense that to get to strong levels of volume growth, do you feel there is a need to invest more in the business, which could take actually your operating margins down in the interim? Or do you feel the business is at a situation where you know there is no trade-off to be made and growth can be achieved along with stable to expanding margins in the medium term?
Yeah. Thanks, Arnab. Arnab, firstly, our focus is obsession is going to be on volume-led revenue growth. Very simply, if I had to tell you how we will look at the business, it will be unblinkingly looking at growth first. When we do that, we have the right financial leverage to deliver the operating margin of the business. For me, that is simply how we will run this business. I mean, I've mentioned already the four pillars that we have, but hopefully, this answers the question with clarity, Arnab.
Understood. Just to follow up on that, Priya, I mean, what I meant was that, you know, ultimately, operating leverage does translate into, you know, margins also. In the past, HUL has had this, you know, range of margins which they have, the company has held at 22% - 23%. Do you feel that is a defendable range or that depends on the growth environment? Therefore, as you focus only on growth, there could be a situation where margins could be lower or below that range?
Yeah. Let me come in, Arnab, out here. As you mentioned, our outlook for margin and guidance is a range of 22% - 23%. As we do the demerger of ice cream , everything else may equal, 50 bps- 60 bps gets added to this number once we start reporting ex-ice cream results. We're very clear that, as Priya mentioned, when a choice comes between top line and bottom line, it's always competitive volume growth. That's always the first protocol. If at all we have to invest more in the business, like we have done, you know today we operate at almost 200 bps lower than our peak margin.
That was a conscious call that we took because we knew that to drive growth, especially in the tepid consumption atmosphere that we have been in for the last couple of years, we have to invest on portfolio, on capabilities, and hence across different lines of the P&L to ensure that we are able to drive competitive volume growth. This is exactly what we will do going forward as well. Currently, where commodities are, where our investment plans are, where our innovations and portfolio is placed, we do believe that at a range of 22% - 23%, excluding the ice cream impact, and on top of that, as I mentioned, 50 bps-6 0 bps from ice cream , at this level, we'll be able to support the investments which are required.
We are very clear that if at all a time comes we ever have to come back with a revised change in our outlook because commodities change, because operating environment changes, we'll always come back and share. The guidance that we have given today and in the past as well is for the next couple of quarters. Read that as two to three quarters. If something changes, we'll always come back on top of that.
Thanks, Ritesh. Thanks so much. My second question actually was on three specific areas where I think in the last few quarters you've highlighted a lot of changes. Your initiatives were put in, so nutrition, Lifebuoy, Glow & Lovely, these three areas. If you could give us an update on how has been the feedback of your initiatives, which are the areas which are looking encouraging? Where do you think there's more time or more work to be required for seeing growth come back?
Yeah. Let me take that. Let me start with nutrition. Like we mentioned, you know we are seeing early green shoots with low single-digit UVG on nutrition. We have launched into new formats and new SKUs, whether it's the RTDs or the Pro Fitness range with the adult meal replacement product that we've entered. You know, for me, nutrition and well-being is a huge future growth area in India, with longevity and fitness being critical. That's an area of work that we are on. More work to do in nutrition. This is early days, but it is an area we will keep working. Let's come to Glow & Lovely. Glow & Lovely for us, we launched Glow & Lovely Glass Bright. It was to extend the Glow & Lovely brand beyond the core and premiumize it with the new offering of lighter sensories, more relevant for modern, youthful, young consumers.
This range has performed well ahead of our expectations for us, and we are pleased with the performance there. Remember that in India, in skincare, what is happening is regimes are growing. It's growing from just a single brightness product to adding moisturizers, face washes, and many other products. The way we are competing is not just with Glow & Lovely, but we have added new products, including our latest launch on Vaseline Cloud Soft, which is a new range of moisturizers which has entered the category, and we have entered with Simple into face washes. We keep expanding our portfolio beyond Glow & Lovely. On Lifebuoy, we have seen competitiveness improve. Having said that, we have work to do, and it has impacted this quarter with GST. As a result, as Ritesh mentioned, the entire category, while competitively improving, has struggled on account of GST.
A more radical and bold transformation is what you can expect on all three brands to make them more modern, youthful, and contemporary.
Thanks so much. That's it from my side. All the best, Ritesh, for your next.
Thank you. The next question is from the line of Latika from JP Morgan. Please go ahead.
Hi, thanks for the opportunity. My first question was on specific consumption trends at a macro level. I understand the last quarter was fairly noisy, but starting this year, we have been witnessing multiple positive catalysts and hoping that these will translate into a material pickup in FMCG demand. Things have been a little more gradual. The chart that you showed at the beginning of the deck shows a bit of tapering for rural volume growth and a bit of pickup in urban. I wanted to get a sense from you on what you are picking up on the ground beyond the Nielsen data and any specific changes that you may want to flag on urban or rural sites.
Initially, in your comments, you also talked about wanting to monitor what is the weather impact on our demand in general. Are there any potential risks also that we need to be mindful of at a category growth level? A similar question here is, is there a way for you to gauge, give us a rough guess on what could have been the underlying volume growth if it was not for the GST transition impact? That's the first question.
Yeah. No, Latika, thank you. Let me just pick this up. We all know that urban has 2/3 of FMCG consumption, but rural has 2/3 of Indians living and earning livelihood. Both the urban and rural markets are equally important for us to drive business. At this stage where we see the FMCG market, both are contributing. Urban is growing, and so is rural growing. We have used the word that we do see this now demand trends to be stable, which means we're not seeing big ups and big downs. When I look at moving annual total for the last 12 months' time, we're seeing both urban and rural contributing. You alluded to the economical impact, the monetary easing, which will help mortgage interest costs, the direct tax benefit, GST benefit across multiple categories. Inflation, especially food inflation, which is meaningfully lower. Good monsoon last year.
Though it's a prolonged monsoon this year, we know that the overall water tables will be much better. It'll do well for the rabi crop. We just got to see how the harvesting happens with any rains in the last few weeks in this quarter. When I add all of this, it is absolutely in a positive territory with both urban and rural contributing. Yes, there are risk factors, as you called out. As I mentioned earlier, monsoon, let's see with kharif output with some amount of intermittent rain as monsoon was prolonged. Winter, we will know we loaded pretty well the trade, so it's all there now to sell. If at all we have a decent winter, we should have a good outcome. If winter is either shorter or less severe, we know it'll always impact sales. Those two items we'll see when it comes.
On top of all of this, the work that we have done on our portfolio, on our innovation pipeline that is further supporting our growth trajectory. The INR 8,000 crore market makers portfolio we spoke about earlier, or a INR 3,000 crore digital-first business that we have in beauty and well-being, these businesses have strong legs of growth. Acquisition of OZiva a couple of years back, that's helping us grow and contribute very meaningfully. Minimalist, it'll not come in UST, but it is contributing to overall, let's say, the scale of the company. All those things are coming together, so it's helping and benefiting us. Now, coming to your question on GST impact, we estimate that this quarter we saw overall at an aggregate HUL level up to 2% impact, largely volume of GST transition.
That's what our approximation is, what was the impact of GST on the total aggregate HUL business?
Sure. This is very helpful. The second question was, you know, clearly the four key priorities that have been stated. You want to double down on high growth demand spaces and also align towards channels of the future. Quick commerce has been cited multiple times by the parent also as a key focus channel for your company. I think salience of this channel probably is mid to high single digit, if you could clarify. If you could share, you know, is there any change in your approach going forward for this channel in terms to, you know, grab more market share and also, you know, probably target new categories which can be built up further here?
As Latika, Priya mentioned earlier, overall radical segmentation of the market from all three lenses: consumer lens, channel lens, and media lens is one of the top priorities we'll have as a business. Today, our business is 70% GT, roughly 20% modern trade, 8% e-commerce, and a couple of percentage other channels. That's the rough split that we have. For our business to grow, we will, of course, ensure that all channels are growing. It's a segmented approach of the portfolio deployment, and activation is what we referred to earlier. Take an example of quick commerce. Again, like last quarter, we doubled the business year on year on quick commerce because we know this is where consumers are today more leaning in in terms of their preferred choice or channel. The overall growth of e-commerce and digital has allowed us to do both.
At one stage, our GT business has got more share executed, and at the same time, it has helped us to create within duty well-being an INR 3,000 crore plus business growing at strong double digit, which is focused on digital-first brand. We will always keep doing that. It's always A and B. It's always an and. It's urban and rural. It's general trade and organized trade. It's premium consumers and, let me say, mid-bucket consumers. It's important for us to have this and mentality across the business. That's the only way end to end as an organization will end up growing.
All right. Thank you so much, and wish you both the best.
Thank you.
Thank you, Latika. Appreciate it.
Thank you. The next question is from the line of Mihir P. Shah from Nomura. Please go ahead.
Hi. Thank you for taking my question. The first question is to Priya. Priya, actually, if you can talk a bit more on the reimagining or modernizing the core portfolio that you mentioned, what should one expect? Should one expect a near complete overhaul of the core with new packaging, new communication, etc.? I just wanted to understand what does that reimagining, modernizing bring in? Secondly, you mentioned fewer big bets. Can you share some on what you're thinking about fewer big bets? Because in your opening remarks, we heard premiumization and market development spanning across categories. What does fewer big bets allude to? Some examples, what does it include, will be helpful. That's my first question. Thanks.
Thank you. Let me start with talking about how we will reimagine our core brands and what that entails. If you look at brands, and let me give you an example from the beauty category just as an example. If you look at brands, brands no longer, it's not just good enough to have higher brand equity. You need to have brands that are truly desired and desirable by consumers. Today, we have almost 400 million Gen Z consumers in India, and these consumers are indeed driving change and transformation in India. As we reimagine the brands, we need them to be more modern, more youthful. This means that we have to look across the brands, whether it is packaging, whether it is a proposition, whether it's the products. It will be a renovation on the core, but also very much premium innovation on our core brands.
A mix of this, but boldly transforming our brands is critical as India is transforming and the consumers in India are changing what they're looking for. This is both in terms of marketing, more social-first demand generation so that consumers can discover brands more online, but also in terms of fulfillment. As Ritesh mentioned, it's an and, not an or. When you think of the transformation of India, we often talk and we think about the urban transformation taking place in India.
What's exciting with what's happening in India is the rural transformation that is taking place, whether it's through more road infrastructure, through better electrification, tap water in every home, or indeed digital, which is truly transforming how consumers get brand aware of new propositions, new brands, and new products. Therefore, for HUL , it is very critical that we span across this price-product-benefit pyramid, transforming our core brands in line with these consumers. That, in a sense, is what you can expect: bolder marketing transformation and channel transformation. The second question you asked was on fewer bigger bets. Here, the key point for us is to scale bets. When I was referencing fewer bigger bets, what I'm referencing is that we have the opportunity now to call out and scale a few of these bets to really develop markets.
This will be based on market readiness, consumer readiness in the choices we will make of where we invest disproportionately for scale. I can give you an example just to take an example from the cleansing category. Today, the cleansing category in India is mostly a bars category. There's only 2% of the category, which is liquids and body wash liquids. There's a huge opportunity for us to develop these markets and to scale body cleansing liquids. That just is an example of the kind of work we will do to disproportionately invest behind a few segments. I hope that answers the question.
No, great to hear that. Looking forward to all the bold launches and the communications that you will be doing. Thanks for that. Second bookkeeping question, Ritesh, I have a few on the transition, but I'll probably take it offline because you've answered plenty. Quick question on other operating income and the employee cost. Any one-off sitting out there? How should one think about that going forward?
Yeah. First, the employee cost, and I always like to add employee cost, we need to add other expenses. Both buckets put together, they operate at 18% - 18.5% range. This quarter, as you saw, year on year, we have a little lesser employee cost and a little higher other expenses. There's always some phasing which is involved. Same period last year, we had a different base of each of expenses. Hence, year on year, you see that impact coming in. Please add both of them, and we will be always in the range of 18% - 18.5% put together. There'll be some pluses and minuses in a quarter because of the phasing, but it'll start aggregating to that range approximately. Nothing different, nothing substantial, I would say, but that range. Other operating income, we have P&L benefits, which have been accrued lesser. Again, that's a typical reality.
With the ice cream business now and with demerger upcoming in, we'll stop having that benefit coming in the P&L directly. Accruals have been lower on other businesses as well. Given the impact which have happened on growth for this year, we'll end up accruing those, and we are more certain that those accruals will come true. On a, let me say, on a measure accounting basis, we chose not to accrue in this quarter those benefits. Once we know that we have met the criteria, we can go back and accrue at a later point in time. We'll revisit this at the end of the financial year when we have full-year results.
Got it. Thank you very much, Ritesh. Wishing you all the very best in your new role. It was a pleasure interacting with you.
Thank you, Mihir. Any questions you have offline, please, we can pick it up. Thank you.
Thank you. We'll take the next question from the line of Sheela Rathi from Morgan Stanley. Please go ahead.
Yeah, thanks for taking my question. Priya, my first question was to you. You have articulated very well about the key priorities across the four points which you made. From your perspective, what do you think would be the fastest fix to kind of drive on that whole growth agenda among these four key priorities that you have?
Yeah. I think all four are equally important. It's always the case in a company like HUL . What we will do is focus on the speed and with speed and agility to go behind these. A lot of the fundamentals are in place. Whether it is the work that's been done on the brands, the more robust innovation pipeline, or indeed the doubling down we've done behind future-fit channels, our job now is to accelerate these and really be bolder. That's where my head is.
I'm sorry, just to follow up here, ma'am, do you think that on a quarter-to-quarter basis, we'll be able to track this in terms of how all these priorities are actually shaping up?
I think the priorities I've given to you are more on a long-term basis, but I'm sure as we go, we can look against these, and we will keep updating you on where we stand against this. I don't want to suggest that we should do a quarterly update against each of these, but certainly as the year progresses, I will be happy to share where we stand against them.
Understood. My second question was, we have been calling out that the second half of this financial year would be much better than the first half.
Of course, we have had the GST-related impact in the short term, which Ritesh talked about, the kind of what the growth could have been if this impact would not have been there. Just when we think about the second half, what is the kind of, and keeping aside the October phenomena, because there also we are seeing a challenge in terms of delivering the growth, but if we think about the four months which will be left for the financial year, what kind of growth delta are we calling out from a volume perspective? There is a kind of a tailwind here, and a lot of other participants also checked on that, you know, consumption should come back. Is there something in mind from a management perspective in terms of what is the kind of growth we could see?
Yeah. See, Sheela, always our first barometer is competitive growth. There's a market in which we operate. Our job is, of course, to create market and support market development. Our first stated goal is always to ensure that the outcome that we get, we judge it by has it been company executive.
Have you grown ahead of the market? As we've spoken, that even in the current quarter, our growth has been competitive. When you look at our latest share position for the last moving annual total, we spoke about that we have further gained corporate share, turnover weighted corporate share. That's the first barometer. Second, the point I mentioned earlier, that there are more than one reason now. From a macro-economic perspective, the trading atmosphere looks better and looks improved. That should augur well for consumption. Equally, the work that we have done internally in the organization on innovation, on portfolio transformation, that's further supporting the growth outcome. The third point we mentioned, that we will be focusing on investing in the business to drive growth.
All these three things put together, we do expect to see volume growth to be better in the second half of the financial year compared to the first half. Price growth may or may not play a larger role if commodities are where they are today. We expect low single-digit pricing unless we see some different outcome in commodities to come in. I can't quantify any number, but what I can tell you is that, A, we will see a better outcome of volume growth. That's the single-minded focus. B, we will continue to drive competitive outcome on our volume growth.
Understood. Thank you, Priya. Thank you, Ritesh.
Thank you, Sheela.
Thank you. The next question is from the line of Percy Panthaki from IIFL Securities. Please go ahead.
Hi. Thanks for taking my question and happy Diwali to all of you. My question, Priya, is the four priorities that you mentioned, they seem to be on the right track, but we've also seen similar priorities in the past as well. Just for my understanding, if you can call out, if any, is there any sort of change in the way that you're looking at the business versus what it was before you came in?
Yeah. Thank you, Percy. You know, HUL has, over the last few quarters, in the last couple of years, delivered competitive, profitable, and consistent growth in a very, very challenging macro-economic environment with subdued consumer demand overall. In that context, our job is to really accelerate our performance led out of volume-led revenue growth. That's where we're going to focus our effort. These four priorities are an acceleration of the journey we are on and a sharpening. What I want to bring in is more focus, speed, and agility.
Understood. Just to dwell a little further into this, before you came in, the growth, as you said, the growth was competitive in a situation where macros were weak. The growth was delivered at that time through some other priorities apart from these four?
I think HUL has called out the Aspire strategy, and I think that has been shared actively. The strategy was to unlock and craft it to unlock a billion aspirations. That continues to be relevant. We are seeing progress against that. What I'm referencing is really doubling down to focus on these four areas of priority.
Understood. That's very helpful. Secondly, I wanted to understand, Ritesh or maybe even Priya, in 2017, when GST was introduced and then some of the rates were cut, etc., we saw a fairly good demand response for about six to seven quarters, even adjusted for base effects. We saw a marked acceleration in sort of the top-line growth. Is that, I mean, should we consider that experience and sort of at least partially extrapolate it this time around, or are there reasons why we should not do so?
Personally, the way we will see it, this is one additional input which adds to a few things which are going pretty good in terms of creating overall positive macro-economic atmosphere for driving consumption. As I mentioned earlier, be it monetary easing earlier or the direct tax benefit or the inflation, including food inflation, which is meaningfully corrected, and to add to all of that, now GST benefit coming in, all this put together will augur well for doing both, for improving the net disposable income and for improving consumer sentiment. We all know that these two elements are what genuinely drive consumption. It supports our portfolio to be sold in more premium spaces, and it supports consumption. We do expect that these measures put together will augur well for consumption.
I don't think GST reform on its own will be a silver bullet in terms of driving consumption, but absolutely an important initiative by government which adds to overall demand atmosphere, which has been tipping for the last couple of years. This will augur well. The fact I mentioned earlier, that this is the time where all these initiatives are helping both rural and urban, and it's glad to see that both urban and rural are contributing to overall market improvement.
Just to follow up on this, Ritesh, for your portfolio as a whole, what in your view is the price elasticity of demand in terms of supposing if the consumer price drops by 10% on an MRP level? What's the response? Is it 0.5x? Is it 0.3x, 0.7x? Any kind of rough ballpark that you would have in mind?
Yeah. No, reality, Percy, life is a little more complex than that. I would love to give a straight answer to you, but let me still help you to explain this from two or three dimensions. Now, what are the categories which we know are more elastic to price? Skin cleansing and tea. We have seen that in these categories, when prices go up or commodities grow up, it impacts volume. We have called out for skin cleansing, that where overall we've seen a pretty high amount of wedge basket going up. It impacted category volume growth and also our volume growth. Tea, we spoke about, where we saw a pretty high amount of deflation or inflation at a point in time, we saw that consumers downgraded, not only down-traded, but also downgraded, and they went to a lower price point for consumption.
Of course, that's another category we have seen pretty elastic. Take another example of home care . Even at a peak when we had more than 20% price growth, we still saw mid-single-digit volume growth because we have seen a category like home care more resilient to price changes. There are different, let me say, categories with different experiences. If I further scale it down, it's also a different experience for a different consumer cohort. Hence, very difficult to put a number to it, but I just hope that gave you a good amount of sense between if three large commodities, crude oil, which impacts home care , I would say less elastic, skin cleansing and tea, if at all commodity changes, I would say more elastic.
Where would you put Horlicks here?
Hor licks is a discretionary category. Hor licks, skin care, and we've seen that overall, when net disposable income improves, we've seen that it augurs well for consumption.
Got it. Thanks. Thanks, Ritesh and Priya. Thank you very much. That's all from me. All the best.
Thank you.
Thanks, thanks, Percy.
Thank you. The next question is from the line of Harit Kapoor from Investec . Please go ahead.
Yeah. Hi. Good evening. Just had one clarification for say on the grammage part. In the early part of the latter part of September, you would have had to make all the price adjustments for GST, but now you can actually make the grammage adjustments for the price point packs. I just wanted to understand, when you mentioned early part of November, all this gets normalized, does your entire grammage increase bid for the price point packs also now get adjusted in the same timeline by November?
Yeah. See, overall, Harit, in terms of changes, what we have done is for all non-price point packs, of course, we did price changes. As we speak, those products are reaching the market with new MRP. Even on all MRP stuff, we've given GST benefit, and trade is passing that benefit on to consumers. When it comes to price point pack, to your point, the INR 1, the INR 2, the INR 5, what we have done out here, we have improved and increased grammage or mL, which means effectively there's lower price per gram or price per mL. These changes have also started landing in the market. As we speak across categories, this is now reaching the consumers. We do expect that in early November, it will be present across length and breadth of the country.
There will always be some SKUs which will be a little up and down, but when we mentioned that early part of November, we should have normal trading conditions, what we meant was that bulk part of the business will be there with new price points in the market.
Fantastic. My second question was to Priya. Given that you've recently come in and relooked at the portfolio, as well as there's probably been a temporary kind of a blip because of GST, a lot of focus would have gone around executing that well. When one would have to judge in terms of the volume-led growth strategy, how well it has panned out, do you think FY 2027 would be the right barometer and not the near term? As you start to put some of these plans in place, is that the right way to look at it for investors and us?
I think many of the things I mentioned are long-term in nature, medium to long-term in nature, right? I think the focus, as I said, is obsession on volume-led revenue growth, putting in place the right conditions across our business. This is a continuous journey we have been on and will continue to be on for our business.
Okay. Fantastic. Wish you all the best.
Thank you.
Thank you very much.
Thank you, Harit.
Thank you. The next question is from the line of Nehar jam from HSBC. Please go ahead.
Yes. Hi. Good evening. I had two questions from my side. The first one on the tea segment, that given the correction in prices of tea and the fact that we are looking at, say, marginally pricing the commodity, is it that in the Q3 quarter, we could see prices adjust before the cheaper raw material is something we consume and that could sort of impact our margin specifically for this segment?
Yeah. With tea, now, as we speak, we are in season. Tea starts to come in in May, June, and then we start seeing more production coming in. We have a good sense now of tea season. The prices that we have in the market now reflect the lower commodity purchase price that we have and the lower, let me say, spot price that we see in the market. As I mentioned earlier, this is one of the categories that always benefits when the overall price table comes down. We have shown and declared, like last quarter, this quarter as well, high single-digit price or high single-digit overall growth, UST growth for the business. This high single-digit growth is supported also by volume growth as well, apart from price growth.
Our strategy of pricing to replacement has been in play for this quarter, and we are seeing a positive impact of that coming in.
That's very clear. My second question was to Priya. On the BB and well-being portfolio stuff, if you look at current portfolio brands, it's mainly been, say, Vaseline, Ponds, where we've obviously extended it to different subcategories and sort of driven the innovation. As you look at scaling this specific segment ahead, are these current portfolio brands sort of enough? Is it where the innovations will happen, or will we look at more bolt-on acquisitions similar to what happened with Minimalist, say, six to nine months back?
Yeah. If you look at the beauty category, let me start with the key trends that drive the beauty category globally. That's important to understand. The first is that the beauty brands that grow in the category tend to be brands that are desirable. This is very critical in beauty. It's not just functionality, right? It's about aesthetics, sensories, and creating truly desirable brands. These are brands, a lot of beauty discovery happens online, and you need to be social first. These are two very important things in beauty. The third is really a robust innovation program because consumers in beauty always seek more. As they get more affluent, regimes tend to grow. We are, as you know, the leaders in beauty, so both in skin, hair, and color cosmetics. Our job as HUL will be to keep reshaping beauty regimes.
As India gets more affluent, this has been our focus and will continue to be our focus. To add from very simple regimes to add more complex regimes and for us to be the people who shape beauty regimes in India, that has been our focus and will keep being our focus. The team's actually done an excellent job, both organically, as you mentioned, in adding innovations across the brands, both in hair care and in skin care. We will continue to look at appropriate bolt-on acquisitions as relevant to keep adding to our portfolio.
Very clear. Thank you so much.
Thank you.
Thank you. The next question is from the line of Siddharth from CWC. Please go ahead.
Hi. Welcome back to HUL , Priya and Ritesh. Thanks for taking my question. The first one was to understand, you mentioned e-comm is broadly about 8% of your sales. I'm assuming about 12% of urban sales, considering 2/3. As that grows, how does terms of trade change and how does that sort of impact margins? That was question number one. Question number two was, if we had to look at the larger portfolio, there's a fairly large majority of the portfolio, which is 90% to 100% penetrated in the country where the underlying volume growth is really population growth. As market leaders, obviously, you will probably grow at category or thereabouts.
In that, premiumization, be it from soaps to liquids, both on hand and body wash, or be it from soaps, powders to liquids in case of detergents, or shampoos to conditioners in case of hair care , those have been slow. How do you see that changing to accelerate that premiumization-led growth in these very deeply penetrated categories? Those were my two questions.
Yeah. Let me pick up Siddharth. First of all, coming to margin and stroke e-commerce, we have maintained in the past as well that when modern trade came and became bigger, one of the reasons why we, as modern trade, have now become bigger, we have advantage in our portfolio there because we sell a more premium portfolio in modern trade. That is what has helped us to grow modern trade pretty well over the last couple of decades. E-commerce is no different. At this stage, there is a much higher amount of fragmentation on the channel. These things will stabilize over a period of time. Our focus is now doing both. A, invest in the channel, where this is what the preference of consumers are, and we will always go where our consumers are.
As we invest in the channel, we're also very mindful that our portfolio is very sharply crafted. We use a term called design for channel. Our packs that we sell on e-commerce, they're designed for e-commerce. The packs that we sell in quick commerce, they're designed for quick commerce. This ensures two things. A, it ensures the right level of profitability. B, it ensures that we have much lower channel conflict. All put together, at this stage, we know that we're in the investment phase for e-commerce, and we know that it's the right thing to do to keep developing a portfolio and keep bringing proportions that consumers demand on the channel today. With the point that Priya mentioned earlier, it's an end story for growth for us. We have to grow general trade, we have to grow modern trade, and we have to grow e-commerce.
Within that e-commerce, you have to grow all parts of e-commerce. That is the only way we'll get total growth as Hindustan Unilever . Now, coming to the second question on high penetrated categories, you're right. When you look at skin cleansing, when you look at hair, for that matter, driven by shampoo sachets or detergents, these are highly penetrated categories. Equally, there are many categories like lifestyle nutrition or skin care or for regenerative sun care, much lower amount of penetration. Many subcategories within skin care have single-digit penetration. Massive headroom for growth. At an aggregate level, with a $54 per capita consumption, when I compare with Indonesia, which has twice the amount of GDP per capita, but 4x FMCG consumption per capita, we know there is a long runway for growth in terms of FMCG. Even in large categories, let me quote an example of home care .
Today, not every household has a washing machine. Every household that has a washing machine is still not using a liquid detergent. The amount of growth that we have from mass powders to premium powders, premium powders to liquids, from liquid to what we just launched recently, liquids which end up performing with a much faster cycle, or for that matter, going to shorts at a later point in time, or for that matter, going from fabric wash to fabric conditioners, there's a long runway for us to ensure that we are able to make our portfolio continuously premium. In some spaces, we've seen more amount of outcome, like laundry liquids, where a similar amount of adoption for body wash liquid has been slower. Today, body wash liquid is more like 2% for the category, whereas it's almost 7% or 8% when it comes to home care liquids.
There are different levels of trajectories, but the job of developing market and making market is a full-time job. As market leader, this is always the first focus for us. With 85% of the business where we lead the market and in a country which has overall per capita consumption, long runway to growth, this is what our focus will always be.
Thanks. Just to follow up on the e-commerce piece, given the fact that you mentioned it is an investment channel, how do you see the salience of top-of-the-funnel spends today, brand awareness, brand consideration spends, versus platform spends? What's the salience today and how do you see that changing, say, over the next two years?
See, I won't be able to share hard numbers, but let me tell you that overall CAC to LTV ratio, this is what is one of the single biggest important factors that we measure internally in the business. Today, we have more than 50% of the investment that happens digitally. When we measure ROAS, there are a few parameters, including a CAC to LTV ratio is one of the parameters we always ensure that it is, A, competitive, and it is top of the pack in the industry. There are learnings. What drives growth on e-commerce? What drives growth on quick commerce? What are the elements of investment within that on the platform that we need to do to get far better ROI? That's exactly what our team does. We have a full-blown machinery which works on ENRM.
Our net revenue management machinery, we deploy digital learnings at scale to fine-tune our overall deployment. We have our own in-house system called Sangam that allows us to and helps us to allocate media far more effectively across the various demands it has. That just gives you an example. Of course, I can't share more details of that, but I hope you got a flavor of the way we approach this area.
Sure. Thanks. All the best to you, Ritesh, and welcome back and all the best to you.
Thank you.
Thanks. Thank you, Siddharth. Appreciate it.
Thank you. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Mr. Yogesh Mulgaonkar for closing comments. Thank you and over to you, sir.
Thank you, Michelle. With that, we now come to the end of the Q&A session. Before we end, let me remind you that the playback of this event will be available on the IR section of our website in a short while. Thank you, everyone, for your participation and have a great evening.
Thank you. Thank you all.
Thank you.
Thank you.
Thank you. Thank you, members of the management. On behalf of Hindustan Unilever Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.