Godrej Consumer Products (GCPL IN) Near-term margin pressure; structural levers intact

GCPL results were largely in line on the operating front with Revenue/EBITDA seeing a negative deviation of 1.6/ 0.6%, while Adj. PAT witnessed a larger negative deviation of 10.4% due to higher than anticipated depreciation and finance costs. Consolidated revenues were reported at Rs 39,004 mn, up 11.0% YoY. India margins remain at normative levels as anticipated and Indonesia margins saw a significant step up of 600+ bps YoY. EBITDA margins came in 22 bps better than estimated at 21.4%, largely flat YoY. Accordingly, EBITDA recorded a growth of 10.8% YoY at Rs 8,414 mn. Adj. PAT stood at Rs 5,162 mn, increasing by 19.5% YoY, due to higher tax base.

Steady domestic recovery

Standalone delivered a broad-based quarter with 8% UVG translating into 10% YoY revenue growth, aided by GST 2.0. Home Care led with +12% YoY on traction in HI, Air Fresheners and Fabric Care; Personal Care grew 3% YoY with share gains in personal wash and double-digit growth in perfumes. EBITDA grew 18% YoY at 24.7% margin. HI structural overhang has receded, with trajectory shifting to high single-digit, aided by RNF and even seasonality; Q1FY27E may benefit from kerosene/LAB-led disruption to local players. Godrej Fab is now a national play (Q4 ARR ~Rs 5 bn GSV), turning EBITDA breakeven; Godrej Spic scaled pan-India.

Indonesia story improving

Indonesia clocked UVG of 4% and sales growth of 3% YoY, sustaining mid-single-digit volume momentum for the second consecutive quarter on shampoo hair colour, baby care and the Stella LV relaunch. Pricing pressures highlighted over recent quarters have largely bottomed out, with operating conditions expected to improve from FY27E. Revenue growth is expected to lead volume (currency tailwind reversing in Q1FY27E), with steady-state guidance of mid-single-digit volume (potential 5–6%) and high-single-digit value growth.

Outlook and margin guidance

Management expects calibrated India growth at normative 24–25% EBITDA margins, with H1FY27E seeing modest pressure before a relatively quicker recovery as inflation is more evenly spread, enabling broader pricing actions. With blended RM inflation ~7–9% levels, the company has taken price hikes in some categories, with further calibrated hikes likely. Management views GAUM and LATAM as businesses potentially on the cusp of higher growth. Key monitorables include El Niño (favourable Q2/Q3FY27E), West Asia commodity backdrop, and compounding growth in air care, Godrej Fab and HI; ETR broadly similar to FY26.

Valuation and view

The standalone print remains steady, with high-single-digit UVG anchored on Home Care strength. Indonesia has bottomed on pricing and is set to lead with value growth. GAUM continues to compound as Africa shifts towards a conventional FMCG profile. Together, these position GCPL to sustain early double-digit consolidated revenue growth. Near-term India margins may see modest H1FY27E pressure on RM inflation, but a more even cost spread enables quicker pass-through and gross margin recovery, while Indonesia step-up and LATAM normalisation aid the consolidated mix. We remain constructive on the growth trajectory, supported by household insecticides tailwinds, scale-up of Godrej Fab and air care and improving international business, driving long-term value creation.

We have made modifications to our estimates leading to (12.5)/(2.4)% change to our FY27/28E Adj. EPS. We anticipate a Revenue/ EBITDA/ Adj. PAT CAGR of 9.2/14.7/20.3%, respectively over FY26-28E. We retain our valuation at 51x FY28E Adj. EPS of Rs 29.4 and arrive at a price target of Rs 1,465 (Rs 1,500 earlier). With fundamental prospects intact, we believe the CMP is at attractive levels. With an upside potential of 33.8%, we retain our ‘BUY’ rating on the shares of GCPL.

Y/E March (Rs in mn)	FY24	FY25	FY26	FY27E	FY28E
Revenue	1,40,961	1,39,965	1,51,779	1,65,669	1,81,086
Growth (%)	5.9	-0.7	8.4	9.2	9.3
EBITDA	30,703	30,031	31,562	33,899	41,518
EBITDA (%)	21.8	21.5	20.8	20.5	22.9
Adj. PAT	-79,233	18,961	20,290	23,244	29,379
Adj. EPS	-5.5	18.1	18.2	22.4	28.7
Adj. EPS Growth (%)	-532.4	-123.9	7.1	14.6	26.4
ROE (%)	-62.9	15.8	16	16.8	19.2
ROCE (%)	21.9	21.7	21.2	20.9	23.6
P/E (x)	-14.1	59.1	55.2	48.2	38.1

Source: Company, ACMIIL Research

Quarterly Performance – Consolidated                                                  

Y/E March (Rs in mn)	Q4FY26	Q4FY25	YoY (%)	Q3FY26	QoQ (%)	ACMIIL Est.	Var (%)	FY26	FY25	YoY (%)
Net Revenue from	39,004	35,142	11	39,980	-2.4	39,645	-1.6	1,51,779	1,39,965	8.4
operations
Expenses:
Total Raw Material Cost	18,693	17,089	9.4	19,318	-3.2			73,944	65,361	13.1
Employee Cost	3,251	2,625	23.9	3,281	-0.9			12,321	11,488	7.3
Other Expenses	8,647	7,836	10.3	8,576	0.8			33,951	33,086	2.6
Total Operating Cost	30,590	27,550	11	31,175	-1.9			1,20,217	1,09,935	9.4
EBITDA	8,414	7,592	10.8	8,804	-4.4	8,465	-0.6	31,562	30,031	5.1
EBITDA (%)	21.6	21.6	-3bps	22	-45bps	21.4	22bps	20.8	21.5	-66bps
Depreciation	761	726	4.9	664	14.6			2,675	2,340	14.3
EBIT	7,653	6,867	11.4	8,140	-6			28,887	27,691	4.3
Other income	694	737	-5.8	559	24.2			2,662	3,161	-15.8
Interest expense	903	896	0.8	789	14.4			3,316	3,501	-5.3
Extraordinary Items	-930	-314	-196.4	-910	-2.1			-2,332	-632	-269
PBT	6,515	6,394	1.9	7,000	-6.9			25,902	26,719	-3.1
Tax	1,997	2,275	-12.2	2,021	-1.2			7,287	8,196	-11.1
Effective Tax Rate (%)	30.7	35.6	-493bps	28.9	179bps			28.1	30.7	-254bps
RPAT	4,518	4,119	9.7	4,979	-9.3	5,591	-19.2	18,615	18,523	0.5
APAT	5,162	4,321	19.5	5,626	-8.2	5,761	-10.4	20,290	18,961	7
APAT (%)	13.2	12.3	94bps	14.1	-84bps	14.5	-130bps	13.4	13.5	-18bps
REPS	4.4	4	9.7	4.9	-9.2			18.2	18.1	-0.4
Adj. EPS (diluted) (Rs)	5	4.2	19.5	5.5	-8.2			19.8	18.5	7.1

Source: Company, ACMIIL Research