Godrej Consumer Products Ltd’s (GCPL) base coming off a soft FY25 only raises the stakes for this year. The company’s FY25 India volumes rose 5% year-on-year against a high single-digit aspiration. Consolidated revenue grew 2%, margins contracted and the soaps portfolio in the personal care segment remained a drag.
The management has estimated mid-to-high single-digit India volume growth in FY26, high single-digit consolidated revenue growth and double-digit Ebitda growth (versus a 2% drop in FY25).
Analysts are building in high single-digit FY26 Ebitda growth. Motilal Oswal Financial Services and Emkay Global Financial Services estimate GCPL’s FY26 Ebitda growth at 7.8% and 9.5%, respectively.
The year, however, began on a dull note with the June quarter Ebitda declining 4% year-on-year and margin falling 280 basis points (bps) to 19%, hurt by palm oil inflation. While palm oil prices have started to ease, concrete margin recovery is expected Q3 onwards.
The management said that the near-term margin trigger will depend on supply chain savings and a planned 150-200 bps cut in ad-to-sales, without sacrificing media reach.
Consolidated revenue at ₹3,662 crore in Q1FY26 meant 9.9% year-on-year growth, the best in the past eight quarters. All segments did well, except soaps, which were hit by competitive pricing, sharp grammage cuts and a poor summer.
Thus, sales in GCPL’s personal care segment – about a third of the India business – grew only 1% in Q1. Stiff competitive intensity means the segment may stay under pressure longer.
In home care, household insecticides, air fresheners and fabric care surged, with GCPL gaining share across categories. Goodknight electrics volumes grew in double digits, backed by the exclusive renofluthrin molecule mosquito repellent.
Personal care has new growth engines. The Raymond Consumer Care acquisition has added Park Avenue and Kamasutra products, broadening the franchise. Hair colour delivered double-digit Q1 volume growth, while deodorants and perfumes also showed traction.
Mixed bag
International was a mixed bag. Growth in Africa was 30%, though margins were diluted by Aer Pocket launches. Indonesia remained under pressure from a macro-slowdown and price-led competition, though stability is expected by Q3, with the management expecting high single-digit volumes and a mid-20s margin.
Motilal expects a growth recovery in FY26, with macro-side drives and stability in Indonesia supporting underlying growth.
But with the GCPL stock already up 15% so far in 2025 and trading at 47 times FY27 estimated earnings, as per Bloomberg, investors want proof of delivery, not direction.
