More Stories

Informist, Monday, Oct. 27, 2025

By Avishek Rakshit

MUMBAI – The cut in the Goods and Services Tax is likely to hit Godrej Consumer Products Ltd. in the September quarter because its sales channels destocked old inventory. Consumers also deferred their purchases in order to benefit from lower taxes and prices. Godrej Consumer slashed prices after the GST rates cut. However, it did not help improve sales volume in the September quarter, according to analysts.

Godrej Consumer is expected to report a 1.3% on-year fall in its net profit for the September quarter to INR 4.9 billion. The company's revenue is expected to increase by just over 6% on year to nearly INR 40 billion. Both consensus estimates are based on the average of estimates from 11 brokerages.

On a trailing basis, the company's bottom line is likely to increase nearly 4%. The company's top line is expected to increase over 6%. Godrej Consumer will declare its results for the September quarter on Friday.

The highest estimate for the company's consolidated net profit is INR 5 billion from JM Financial Institutional Securities Pvt. Ltd. The lowest estimate is INR 4.8 billion from Nuvama Wealth Management Ltd. The highest estimate for consolidated revenue is INR 39.6 billion by Sharekhan Ltd. and the lowest is INR 38.5 billion by Nirmal Bang Equities Pvt. Ltd.

The tax cut, which was positive for one-third of the company's portfolio, led to temporary sales disruption, Godrej Consumer said in its quarterly business update earlier this month. The company said it had made some short-term adjustments across its trade channels. Godrej Consumer said the adjustments were made as distributors and retailers focused on liquidating existing inventories. This delayed the flow of new orders for the company. This, along with the temporary deferment of consumer purchases, would affect both growth and profitability, the company had said.

Consequently, sector analysts expect Godrej Consumer's business in India to deliver only mid-single digit value growth. The company is expected to report low-single digit underlying volume growth in the September quarter, sector analysts said.

Godrej Consumer said that its home care portfolio continued to maintain strong sales momentum in the September quarter. However, the home care portfolio is expected to report high single digit value growth, sector analysts said. Home care portfolio accounts for 41% of the company's sales in India.

The personal care division is likely to report a low single digit fall in sales, primarily due to a decline in soaps sales, the company said. The company did not clarify the reason for or the extent of the decline in soap sales. The personal care division accounts for 54% of Godrej Consumer's annual domestic revenues. The domestic business comprises 64% of Godrej Consumer's annual turnover.

Kotak Securities Ltd. estimates Godrej Consumer's domestic sales will be impacted by 400 basis points in the September quarter due to the destocking by Godrej Consumer's trade channels. Nuvama projects a 1% on-year volume growth for Godrej Consumer in the September quarter. Nuvama added that the soaps portfolio will continue to be under pressure, mainly due to grammage cuts taken by the company in the September quarter.

Godrej Consumer's business in Indonesia is also expected to be impacted negatively. Competition increased in Indonesia and Godrej Consumer cut prices to retain its market share. Indonesia accounts for 12% of the company's annual revenue. Sector analysts estimate the price cut will result in a low-single digit decline in value growth in Indonesia. However, Godrej Consumer's underlying volume growth in Indonesia may improve marginally on year, sector analysts said.

Godrej Consumer is expected to report earnings before interest, tax, depreciation, and amortisation of INR 7.2 billion in the September quarter, according to the average of nine estimates. The highest estimate for EBITDA is INR 7.4 billion from Nuvama. The lowest EBITDA estimate of INR 7.1 billion is from Nomura Equity Research.

Kotak Securities said the company's consolidated EBITDA margin is expected to decline by 170 basis points on year at 18.8%. An improvement in Godrej Consumer's standalone gross margins will be offset by adverse operating leverage, Kotak Securities said. Adverse operating leverage refers to a situation when a company's fixed costs are very high relative to sales. In such a case, a company's operating income falls even if sales volume increases.

At 1254 IST, shares of Godrej Consumer were trading at INR 1,130.40 on the National Stock Exchange, down 0.21%. The shares are down nearly 5% since the company announced its June quarter earnings on Aug. 7.

Of the 18 research reports on the company available with Informist, 17 have a 'buy' rating on the stock at an average target price of INR 1,384. One brokerage has a 'hold' rating on the scrip.

The following are the Jul-Sept earnings estimates for Godrej Consumer from 11 brokerages in descending order of the estimate of net profit in INR million:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Deepshikha Bhardwaj

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.