Godrej Consumer Products Limited (GCPL) demonstrated resilience in its Q2 performance, navigating through GST transition impacts in India and macroeconomic challenges in Indonesia. The company reported a 4% year-on-year growth in consolidated sales, supported by a 3% increase in underlying volume growth.

Financial Highlights

• Consolidated revenue grew by 4% to ₹3,802.46 crore
• EBITDA margins stood at 19.3%
• Net profit (without exceptional items and one-offs) declined by 2% year-on-year

Segment Performance

India Business

• Sales grew by 4% to ₹2,362.00 crore with a 3% volume growth
• Home Care segment grew by 6%
• Personal Care segment declined by 2%, primarily due to GST transition impacts

The recent GST rate reduction, while causing short-term trade disruptions, may strengthen long-term consumer demand. GCPL has already passed on the benefits to consumers.

International Business

• Indonesia: Delivered 2% underlying volume growth, but sales declined by 7% in constant currency terms
• Africa, USA, and Middle East: Reported 25% sales growth in INR terms (15% in constant currency)

Category Insights

Home Care

• Household Insecticides: Electrics gaining market share; Incense sticks now the largest branded stick in the category
• Air Fresheners: Continued strong growth trajectory and market leadership
• Fabric Care: Delivered strong growth momentum and market share gains
• New Launch: Entered the Toilet Cleaners category with Godrej Spic

Personal Care

• Personal Wash: Most impacted by GST transition but continued to gain market share
• Hair Colour: Continued market share gains across Crème and Shampoo Hair Colour
• Perfumes & Deodorants: Delivered strong performance

Strategic Acquisition

GCPL announced the acquisition of the 'Muuchstac' brand, a fast-growing men's grooming brand with a strong position in the men's facewash segment. This strategic move aims to strengthen GCPL's presence in the high-growth men's grooming category.

Key acquisition details:

• Muuchstac recorded revenues of approximately ₹80.00 crore over twelve months
• EBITDA of around ₹30.00 crore, reflecting strong profitability
• Acquisition to be completed via slump sale from Triology Solutions Private Limited

Outlook

GCPL expects performance to strengthen sequentially, with the second half projected to deliver a stronger trajectory. The company remains confident in achieving:

• High single-digit underlying volume growth in the Standalone business
• High single-digit revenue growth at a consolidated level
• Double-digit EBITDA growth for India (Standalone) and GAUM businesses

Despite temporary pressures in international markets, GCPL maintains confidence in its strategy, portfolio resilience, and brand strength to deliver sustainable and profitable growth in the coming periods.

Sudhir Sitapati, Managing Director and CEO of GCPL, commented, "Q2 has been a resilient quarter for Godrej Consumer Products Limited, especially given the backdrop of the GST transition in India and continued macroeconomic challenges in Indonesia. Our India business, excluding soaps, has delivered double-digit underlying volume growth, reflecting the strength of our core portfolio and execution."

As GCPL navigates through these transitional challenges, the company's focus on innovation, operational excellence, and strategic acquisitions positions it well for future growth in the dynamic FMCG landscape.

Financial Performance Table

Godrej Consumer Products Limited (GCPL) has announced its financial results for the second quarter, revealing a mixed performance amidst challenging market conditions. The company also disclosed a strategic acquisition in the male grooming segment.

Q2 Financial Highlights

GCPL reported a consolidated revenue growth of 4% year-on-year, reaching ₹3,802.46 crore for the quarter ended September 30. This growth was supported by an underlying volume growth of 3%. However, the company faced headwinds in profitability:

• Consolidated EBITDA declined by 3% to ₹733 crore
• Net profit decreased by 7% to ₹459 crore
• EBITDA margin compressed to 19.17% from 20.72% in the previous year

The company's performance was impacted by the recent GST transition in India and ongoing macroeconomic challenges in Indonesia.

Segment Performance

India business saw a 4% growth in sales, with a 3% increase in volumes. The Home Care segment grew by 6%, while Personal Care declined by 2%, primarily due to the GST transition impact on soaps.

Indonesia continued to face macro and pricing pressures, resulting in a 7% decline in revenue. However, the business maintained a stable underlying volume growth of 2%.

Africa, USA, and Middle East (GAUM) delivered strong performance with a 25% sales growth in INR terms and 15% in constant currency.

Strategic Acquisition: Muuchstac

GCPL announced the acquisition of the FMCG business under the 'Muuchstac' brand from Trilogy Solutions Private Limited. This acquisition marks GCPL's entry into the fast-growing men's grooming segment.

Key details of the acquisition:

• Muuchstac is among the top two players in online men's facewash and top three overall
• The brand recorded revenues of approximately ₹80 crore in the twelve months ending September
• EBITDA (adjusted for one-offs) was around ₹30 crore, reflecting strong profitability
• The acquisition will be completed via a slump sale

Management Commentary

Sudhir Sitapati, Managing Director and CEO of GCPL, commented on the results: "Q2 has been a resilient quarter for Godrej Consumer Products Limited, especially given the backdrop of the GST transition in India and continued macroeconomic challenges in Indonesia. Despite these headwinds, our India business, excluding soaps, has delivered double-digit underlying volume growth, reflecting the strength of our core portfolio and execution."

Regarding the Muuchstac acquisition, Sitapati added, "This acquisition enhances our participation in the fast-growing men's grooming segment and supports our vision of building a future-ready, innovation-led GCPL."

Outlook

GCPL expects its performance to strengthen sequentially, with the second half delivering a stronger trajectory than the first. The company remains confident in achieving high single-digit underlying volume growth in its Standalone business and high single-digit revenue growth at a consolidated level.

Dividend Declaration

The Board of Directors has declared an interim dividend of ₹5 per share (500% on the face value of ₹1 each).

As GCPL navigates through the transitional impact of GST changes and global economic challenges, the company's strategic moves, including the Muuchstac acquisition, position it for potential growth in the evolving FMCG landscape.