Hindunilvr vs Britannia Q4 FY25

HUL reported FY25 revenue of INR 60,680 crore with 2% USG and 2% UVG, while PAT grew 5% to INR 10,644 crore. EBITDA margin contracted 30bps to 23.5% due to commodity inflation and stepped-up investments. Management guided for EBITDA margin of 22-23% for the next 2-3 quarters as they lean into growth, investing behind portfolio transformation, Channels of the Future, and innovation. Key drags remain Nutrition Drinks (Horlicks) and mass Skin Care (Glow & Lovely), though sequential improvement is noted. Risk: if demand recovery disappoints, the margin sacrifice may not yield commensurate volume growth.

Guidance read

EBITDA margin guidance of 22%-23% for next 2-3 quarters: Management expects EBITDA margin to be in the 22%-23% range for the next 2-3 quarters as they step up investments behind growth, before returning to modest expansion. First half of FY26 to be better than second half of FY25: Management expects growth trends to gradually improve in H1 FY26 due to improving macro conditions and internal portfolio transformation actions. Price growth expected in low single-digit range: If commodities remain at current levels, management expects price growth to be in low single-digit range for the near term. Gross margin expected to moderate further: Gross margin is expected to moderate due to commodity inflation and continued commitment to provide the right price-value equation to consumers.

Risk read

Key risks include Nutrition Drinks consumption decline — Horlicks and Boost face category headwinds with declining household consumption; price pack architecture changes may take time to yield results.; Gross margin pressure from commodity inflation — Inflation in palm oil, tea, and coffee not fully priced in, while deflation in crude oil is passed on quickly, creating a price-cost gap.; Increased price competition in Home Care liquids — Analyst raised concern about price-based competition in laundry; management acknowledged competitive actions but downplayed impact on margins.; Receivables at all-time high — Analyst noted receivables at an all-time high; management attributed to leaning in with credit to support distribution expansion, but risk of higher bad debts exists..

Promise ledger

Of 4 tracked promises, management 0 met, 0 close, 3 missed, 1 delayed.

Britannia reported Q4 FY25 revenue of INR 4,376 crore, up 9% YoY, driven by pricing actions and volume recovery. PAT grew 4% YoY to 12.8% of revenue. EBITDA margin stood at 16.6%, supported by aggressive cost savings of ~2.5% of revenue. Management cited clear signs of demand recovery, with rural and urban trends improving. Key growth drivers included e-commerce (growing 7.5x other channels), adjacencies like croissant and wafers, and premium innovations. Input cost inflation (wheat +12% YoY, palm oil +54% YoY) necessitated price increases, but management expects no further hikes if commodity trends hold. Risks include sustained inflation and competitive intensity from unorganized players. Guidance remains cautious but optimistic for double-digit growth in FY26.

Guidance read

Double-digit revenue growth aspiration: Management hopes to return to double-digit revenue growth over time, with Q4 FY25 at 9%. No further price increases expected near-term: Management does not foresee additional price hikes unless commodity trends worsen, with remnants of current hikes flowing into Q1. Cost savings target >2.5% of revenue in FY26: CFO stated cost savings target for FY26 is over 2.5% of top line. CEO succession clarity in 3-4 months: CEO Varun Berry indicated succession planning will be clear within the next three to four months.

Risk read

Key risks include Sustained input cost inflation — Wheat, palm oil, and cocoa prices remain elevated; wheat inflation expected to persist due to higher MSP.; Competition from unorganized and D2C players — Analyst raised concern about D2C brands like Tata Soulful; management acknowledged need to monitor but downplayed current impact.; Slow progress in adjacency mix shift — Despite years of strategy, biscuit-to-adjacency mix remains at 75:25, unchanged from prior years, raising questions about execution.; Volume growth sustainability after price hikes — Price increases of ~5.5% in Q4 may pressure volume growth; management expects healthy volume but delta remains..

Promise ledger

Of 2 tracked promises, management 0 met, 0 close, 2 missed.