Earnings Review
Higher costs, cut in GST hit Godrej Consumer Q2 consol PAT
This story was originally published at 20:21 IST on 31 October 2025
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--Godrej Consumer Jul-Sept consol net profit INR 4.59 bln
--Analysts saw Godrej Consumer Jul-Sept consol net profit at INR 4.90 bln
--Godrej Consumer to pay INR 5 per share interim dividend
--Godrej Consumer Jul-Sept consol revenue INR 38.25 bln
--Analysts saw Godrej Consumer Jul-Sept consol revenue at INR 38.88 bln
--Godrej Consumer interim dividend record date is Nov 7
--Godrej Consumer Jul-Sept consol PAT INR 4.59 bln vs INR 4.91 bln year ago
--Godrej Consumer Jul-Sept consol revenue INR 38.25 bln vs INR 36.66 bln
--Godrej Consumer Apr-Sept consol PAT INR 9.12 bln vs INR 9.42 bln year ago
--Godrej Consumer Apr-Sept consol revenue INR 74.87 bln vs INR 69.98 bln
--Godrej Consumer Jul-Sept consol India sales INR 23.89 bln vs INR 23.01 bln
--Godrej Consumer Jul-Sept consol Indonesia sales INR 4.8 bln vs INR 5.14 bln
--Godrej Consumer Jul-Sept consol Africa revenue INR 8.05 bln vs INR 6.45 bln
--Godrej Consumer consol operating margin 19.3% vs 20.8% year ago
--Godrej Consumer Jul-Sept advt, publicity cost INR 3.76 bln vs INR 3.64 bln
--Godrej Consumer Jul-Sept Indonesia sales down 7% YoY in constant currency
--Godrej Consumer Q2 consol sales grew 4% on year in constant currency terms
--Godrej Consumer Q2 consol underlying volume grew 3% on year
--Godrej Consumer Jul-Sept consol EBITDA margin 19.3%
--Godrej Consumer Jul-Sept India EBITDA INR 5.12 bln, down 8% on year
--Godrej Consumer Jul-Sept India underlying volume grew 3% on year
By Arya S. Biju
MUMBAI – Godrej Consumer Products Ltd. reported a mid-single digit on-year fall in its bottom line for the September quarter as its expenses rose at a faster pace than its sales because of higher costs related to purchases of stock-in-trade, other expenses and advertising and publicity expenses. The fall in bottom line was despite a 3% on-year rise in its underlying volumes and an over 4% rise in sales. The company's earnings were also impacted by the recent cut in goods and services tax, which led to short-term trade disruptions as the channel adjusted to new pricing and cleared old inventory, particularly impacting soaps and hair colour, Godrej Consumer said in a post-earnings press release.
The fast-moving consumer goods company, which manufactures and markets household and personal care products, reported a consolidated net profit of INR 4.59 billion for the September quarter, down more than 6% on year but up over 1% sequentially. Analysts had expected the company to report a 1.3% on-year fall in net profit to INR 4.90 billion. Its consolidated revenue for the quarter rose over 4% on both year-on-year and sequential basis to INR 38.25 billion. This was also below the INR 38.88 billion estimated by the Street.
Despite a slight on-year decline in the company's largest expense, raw material costs, its total expenses for the reporting quarter grew over 6% on year and nearly 4% sequentially to INR 32.33 billion, led by an over two-fold jump in its expenses related to purchases of stock-in-trade, higher other expenses and advertising costs. The company's expenses related to purchases of stock-in-trade more than doubled on year to INR 4.65 billion from INR 2.20 billion. Its expenses related to advertising and publicity for the quarter rose just over 3% on year to INR 3.76 billion and other expenses rose around 2% on year to INR 6.14 billion. However, the company's cost of raw materials, including packing material consumed, fell 0.3% on year to INR 15.24 billion.
The over 4% on-year growth in the company's consolidated revenue for the September quarter, was the slowest in three quarters. In constant currency terms, its consolidated revenue grew 4% on year. Its top line for the quarter was impacted by the reduction of GST rates in India and continued macroeconomic slowdown in Indonesia, Godrej Consumer said in the post-earnings presentation.
"Q2 FY 2026 consolidated net profit de-grew by 2% year-on-year (without exceptional items and one-offs) due to temporary headwinds," the company said in a press release Friday. The company's consolidated earnings before interest, taxes, depreciation, and amortisation for the quarter contracted 3% on year. Its consolidated EBITDA margin for the quarter was 19.3%, compared to 19.2% in the preceding quarter.
Despite the headwinds on account of the GST rate cut, the company's India business, excluding soaps, delivered double-digit underlying volume growth, reflecting the strength of its core portfolio and execution, Godrej Consumer said. The company's revenue from India grew 4% on year to INR 23.62 billion with the total sales volume from the region up 3% on year. EBITDA from the region declined 8% on year to INR 5.12 billion in Jul-Sept. "As guided earlier, this was the last weak quarter for margins, and we expect a return to normative levels in the second half of FY26 for India," Godrej Consumer said.
Under the India business, the company saw a 6% on-year improvement in revenue under its home care category to INR 10.80 billion, led by strong performance in air fresheners and fabric care segments. Revenue from the personal care segment fell 2% on year to INR 11.51 billion, largely led by the GST-related impact on soaps.
In the personal care category, personal wash products were impacted the most by the GST transition with short-term adjustments across trade channels, as distributors and retailers focussed on liquidating existing inventories, Godrej Consumer said. However, the company expects to see a demand rebound in the personal wash products category in the second half of 2025-26 (Apr-Mar).
The company said it also saw the impact of GST rate reductions on categories not directly affected by reduction in GST. "Household Insecticides and Hair Colour were impacted significantly by confusion in trade around similar HSN categories getting rate reduction. Other categories saw moderate impact driven by trade adjustments & reallocation of funds," Godrej Consumer said. However, the GST reforms are expected to boost long-term demand, as nearly one-third of the company's portfolio benefits from a reduced GST rate of 5%, it said. The company has already passed on these benefits of GST changes which came into effect on Sept. 22.
INTERNATIONAL BUSINESS
Sales from the Indonesia business declined 7% on year in both constant currency and rupee terms impacted by continued macroeconomic challenges and pricing pressures. Despite these challenges, the segment delivered a stable underlying volume growth of 2% in the reporting quarter with market share gains across all key categories. EBITDA from the segment fell 6% and operating EBITDA margin contracted to 19.4% from 21.0% in the preceding quarter. The company expects this pricing pressure to ease in a few months.
In contrast, the company's operations in Africa, the US, and West Asia saw a sales growth of 25% on year in rupee terms and 15% in constant currency terms and an EBITDA growth of 20%, led by strong growth in hair fashion products and air fresheners. Operating EBITDA margin for this segment was 13.9% in the quarter. The hair care products range continued to deliver strong double-digit growth across Africa, Godrej Consumer said.
For the six months ended September, the company reported a consolidated net profit of INR 9.12 billion, down over 3% on year. Its consolidated revenue for the period rose nearly 7% on year to INR 74.87 billion.
The company declared an interim dividend of INR 5 per share for FY26 and fixed Nov. 7 as the record date. Godrej Consumer announced its September quarter earnings after market hours on Friday. Ahead of the earnings, shares of the company closed 0.5% higher at INR 1,118.60 on the National Stock Exchange. End
Edited by Ashish Shirke
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