HUL’s new CEO Priya Nair gets analysts’ backing to script a turnaround; stock jumps 4% | Company Business News-OxBig News Network

New Delhi: Shares of Hindustan Unilever Ltd (HUL) rose as much as 4.61% in early trade on Friday, a day after the consumer goods major named Priya Nair as its next managing director and chief executive. Analysts largely backed the leadership change, viewing it as a strong signal of renewed urgency from parent firm Unilever to revive growth in its second-largest market.

Nair, currently president of beauty & wellbeing at Unilever, will take charge on 1 August for a five-year term, replacing Rohit Jawa, who steps down on 31 July. She will be the first female top boss of the consumer goods company in India. Her appointment comes as HUL has been grappling with sluggish demand, margin pressures, and increasing competition from digital-first and regional brands.

Positive response

Brokerages responded positively to the transition, citing Nair’s deep understanding of the Indian market and strong track record on execution. “We see the change of guard at HUL as Unilever’s strong commitment and seriousness to deliver improvement and outperformance from India,” analysts at Nomura said in a note dated 11 July, maintaining a ‘buy’ rating and target price of ₹2,600.

Nair has spent nearly three decades with Unilever, including key leadership roles at HUL, where she led the home care and beauty businesses. During her stint as executive director, home care, she drove a 570-basis-points improvement in segment margins between FY14 and FY20. She later headed HUL’s beauty & personal care business before taking on global roles.

She will also join the HUL board, subject to necessary approvals, and continue to be a member of the Unilever leadership executive.

“She is likely to be an aggressive MD in our view,” said Abneesh Roy of Nuvama Institutional Equities. “Her strong credentials and experience across categories signal a deepening of HUL’s strategic focus on growth segments, innovation, and purpose-led brands.”

HUL’s growth struggles

HUL has struggled to maintain growth momentum in recent quarters. The company reported 2% volume growth for FY25—the same as the previous year. While its laundry business held steady, categories such as beauty, personal care, and packaged foods saw pressure amid inflation and rising competition.

HUL’s volume growth has not crossed 5% in the past six years.

In its research note, Jefferies said HUL’s performance has been “lacklustre for several quarters”, and laid out a wishlist for the incoming CEO. It expects Nair to prioritise defending core market share in soaps, beauty and tea, and to double down on premiumisation, portfolio investments, and fixing lagging assets such as Horlicks.

“HUL must continue to identify and shape emerging trends. Problem areas like Horlicks may need out-of-the-box thinking in the context of rising consumer demand for nutrition,” Jefferies said. It also noted that HUL’s traditional distribution strengths were under pressure, and the company must modernise its go-to-market strategy to remain competitive.

Unilever’s global reset

Nair’s appointment also aligns with Unilever’s broader reset under global CEO Fernando Fernandez. In recent investor calls, Fernandez identified India as one of two “anchor markets” for the group’s global strategy and reiterated plans to “double down” on the country. HUL, which sells everything from soaps to detergents and condiments, contributes about 11% to Unilever’s top line and remains the group’s second-largest market.

While the company has historically focused on improving margin—expanding from 16.9% in FY15 to 24.8% in FY20—Jefferies believes the immediate priority should be growth over profitability. HUL had revised its Ebitda margin guidance to 22–23% for the near term to support brand investments.

Outgoing MD and CEO Rohit Jawa, who led the ₹2,995-crore acquisition of skincare brand Minimalist and launched the Aspire strategy during his tenure, cited personal and professional reasons for his exit. He took over in June 2023, succeeding Sanjiv Mehta.

The Street’s reaction suggests confidence in Nair’s ability to drive change and unlock value. During her global stint, she led a €13 billion portfolio across 20+ countries and championed social-first marketing, influencer-led innovation, and premium brand repositioning.

“The new leadership comes at a time when the business needs sharper execution, stronger digital capability, and bolder bets across price tiers,” said Roy.

It’s tough at the top

The leadership transition follows a broader wave of CEO changes in the sector. Godrej Consumer and Britannia have also reshuffled management in recent years, moves that were seen as inflection points in their journeys.

HUL stock has severely underperformed in the past few years owing to growth concerns due to a narrowing distribution moat and growing competition.

For HUL, much will depend on how quickly the new chief can reignite growth while navigating inflation, changing shopper behaviour, and a rapidly fragmenting marketplace.

HUL reported a turnover of ₹60,680 crore for FY25, up 2% over the previous year, with an underlying volume growth of 2%. Profit after tax grew 5% to ₹10,644 crore.

FMCG’s demand problem

In FY25, India’s FMCG industry saw subdued demand in urban markets, though rural areas saw a gradual improvement in consumption. Commodity prices increased significantly, particularly in palm oil, tea, and coffee, whereas crude oil, soda ash, and skimmed milk powder were deflationary. Moreover, the market has become highly competitive, with online commerce fueling demand for new-age brands. As a result, volume growth has been hard to come by.

In response, companies have been compelled to raise prices, which eventually impacts consumer demand.

Globally, Unilever has seen top management changes as the consumer goods industry has struggled with tepid growth. Last March, the company announced 7,500 job cuts worldwide and said it would spin off of its ice-cream business to boost savings. The move was aimed at doing fewer things but better, the company said at the time.