Hindustan Unilever (HUVR)’s 1QFY24 performance fell slightly short of our expectations. During the quarter, volumes grew 3% YoY vs. expectation of 7% growth, as higher inflation is adversely impacting consumer spending. In 1QFY24, rural market delivered volume growth. While we expect this momentum to continue; however weather patterns remain a critical factor to monitor. The company is normalizing A&P spends to revive volume and bring it back to pre-COVID levels, which represents 9.8% of sales. Management mentioned about funnelling the gross margin expansion towards adspends to drive volume growth. However, the 120bp YoY increase in ‘other expenses’ is due to a step-up in investments, the impact of new royalty incentives, and favorable benefits in the base quarter.