Q4 volume gains, margins could sustain rally in Godrej Consumer

Godrej Consumer Products (GCPL) had a disappointing third quarter (Q3FY25) with flat volumes (after 7 per cent growth H1FY25). Price hikes would be required to maintain margins to offset the cost of palm oil inflation.

- DEVANGSHU DATTA

Godrej Consumer Products (GCPL) had a disappointing third quarter (Q3FY25) with flat volumes (after 7 per cent growth H1FY25). Price hikes would be required to maintain margins to offset the cost of palm oil inflation. However, some analysts see Q3 as an exception with strong volume growth expected to resume and it may be the fastest growing FMCG player in FY26.

In Q3, double-digit growth in laundry, air-fresheners, and sexual wellness were offset by declines in soaps and household insecticides. Further soap price hikes are expected in Q4 onwards. Incense sticks gained market share (high single digits) while liquid vaporisers and laundry liquids maintained market leadership and soaps gained market share in modern trade. But deodorants lost market share.

The India operating profit margin was 22.5 per cent in Q3, lower than the historic 24-26 per cent range. Other expenses grew 20 per cent Y-o-Y in India as GCPL continued rural investments. Consolidated and standalone operating profit declined 10 per cent and 21 per cent Y-o-Y respectively, as margins contracted 290 basis points (consolidated) and 675 basis points Y-o-Y (standalone).