HUL share price declines after warnings of GST 2.0 impact on July-September sales

By Admin

30 Sep, 2025

Hindustan Unilever Ltd. (HUL), India’s largest fast-moving consumer goods (FMCG) company, saw its share price drop on Monday after issuing a warning about muted sales growth for the July-September 2025 quarter. The company attributed the slowdown to disruptions caused by the rollout of GST 2.0 reforms.

Share Price Reaction

At market open, HUL’s stock slipped by as much as 2.68% to ₹2,443.50 per share, even as the broader market moved higher. The BSE Sensex rose 0.39% to 80,744.01 points, signaling investor caution was specific to HUL following its earnings update.

Company’s Warning on Sales

On Friday, HUL informed the stock exchanges that its revenue growth is expected to remain flat or rise only in low single digits for the quarter ended 30 September 2025. This marks one of the slowest growth phases in recent quarters for the FMCG major.

The company highlighted that the disruption was largely temporary, caused by retailers and distributors clearing out existing inventories that carried old prices.

“While this measure supports long-term consumption, we have seen a transitory impact in the form of disruption at distributors and retailers across channels to clear existing inventories with old prices,” HUL said in its exchange filing.

GST 2.0: A Structural Reform

The Indian government rolled out GST 2.0 on September 4, 2025, cutting tax rates on hundreds of items to simplify the structure. The earlier four-tier system of 5%, 12%, 18% and 28% was consolidated into just two slabs: 5% and 18%.

This reform brought down taxes on several essential products, many of which fall under HUL’s portfolio, including soaps, detergents, and packaged goods. Most of these items are now taxed at the 5% slab, improving affordability for consumers in the long run.

Short-Term Pain, Long-Term Gain

Analysts believe that while GST 2.0 is a landmark reform expected to boost consumption over time, large FMCG companies like HUL are witnessing short-term disruptions due to channel inventory adjustments.

With demand fundamentals for essential goods largely intact, the company is expected to bounce back in the coming quarters once trade normalizes. Investors, however, remain cautious in the near term until clearer signs of growth re-emerge.

Outlook

The coming festive season may provide an early test of demand recovery post-GST 2.0. While HUL faces temporary headwinds, the rationalized tax regime could enhance affordability and widen the consumption base, eventually benefiting FMCG majors in India.