ICICI Sec upgrades HUL to 'Buy' on GST-led volume, premium growth outlook

ICICI Securities has upgraded Hindustan Unilever Ltd (HUL) to ‘Buy’ from ‘Add,’ citing rising confidence that a regulatory tailwind from GST rate cuts is translating into a structural competitive advantage for the FMCG major.

 

“We upgrade HUL to Buy (from Add) as our conviction strengthens on the back of how a regulatory tailwind (GST cuts) can turn into a structural competitive advantage,” said ICICI Securities research analysts Manoj Menon, Dhiraj Mistry, Ashutosh Joytiraditya and Akshay Krishnan.

 

In a note dated January 17, 2026, the brokerage said a clear resurgence in volumes, driven by improved price elasticity in personal care products, underpins the upgrade. The analysts believe the GST-led price corrections have unlocked demand elasticity and could support sustained growth from FY27 onwards.

 

 

ICICI Securities identified four key growth levers for HUL. First, demand for large-pack units in personal care categories has shown strong responsiveness to lower prices following GST cuts. Channel checks suggest consumers are increasing consumption or shifting to larger packs, especially in discretionary staples such as shampoos.

 

Second, lower prices have improved the affordability of premium products, encouraging consumers to trade up from mass brands. This trend is benefiting HUL’s strong mass-to-premium portfolio across categories. Early signs of this premiumisation are visible in segments such as personal wash (soaps), the brokerage said.   

 

Third, ICICI Securities expects a sustained volume uptick in the near to medium term, aided by grammage increases in low-unit packs (LUPs) and price cuts in larger packs. The increase in grammage improves the value proposition for consumers and is particularly important for rural markets, where earlier inflation-led shrinkflation had curtailed usage. The brokerage believes restoring grammage can lift consumption frequency, especially among lower-income consumers.

 

Fourth, a renewed focus on the quick commerce (QC) channel is expected to support both growth and margins over the long term. Aggressive promotional activity and a better premium mix on these platforms should aid throughput and profitability, according to the analysts.

 

ICICI Securities also highlighted that unlike core food staples, which typically show inelastic demand, HUL’s discretionary portfolio within staples is now demonstrating favourable price elasticity. As volumes scale up, the company stands to benefit from operating leverage, potentially supporting Ebitda margin expansion.

 

That said, the brokerage sees the GST rationalisation as more than a one-off boost, arguing it has the potential to structurally strengthen HUL’s competitive positioning and growth trajectory in the coming years.   

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