Godrej Consumer Products Ltd. share price target

GCPL’s Q4FY25 performance was soft with consolidated revenue growing by 6% y-o-y with a 5% volume growth, OPM declining by 136 bps y-o-y to 21.1% and adjusted PAT lower by 21.2% y-o-y to Rs. 443 crore.

We maintain BUY on GCPL while raising our Mar-26E TP by ~6% to Rs1,400 (on 50x P/E) from Rs1,325, as we upgrade earnings by 3-4% over FY26-27E on improved margin performance.

With 6% volume growth (4% in India business) and 21.1% EBITDA margin (Street’s estimate at 20.4%), Godrej Consumer posted broadly in-line Q4 results.

We recently upgraded GCPL to BUY from Reduce, as we see that most headwinds are in the base. GCPL has capability of recovering business, given prudent execution.

Godrej Consumer (GCPL) reported a 3% YoY increase in consolidated net revenue to INR37.7b (est. INR37.5b). Constant currency organic revenue growth was at 2% YoY.

GCPL’s Q3FY25 performance was weak as domestic business posted muted 3.6% y-o-y revenue growth (flat volume growth) and a sharp 672 bps y-o-y decline in OPM, which dragged PAT down by 27.7% y-o-y. Multiple headwinds such as a slowdown in urban consumption, surge in palm oil prices and poor season for household insecticides affected domestic performance in Q3.

GCPL has been a play on execution for a couple of years now. Our downgrade (to Reduce) after the Q3 business update factored in concerns on slowdown in/waning of execution.

Extreme weather patterns impacted sales of Household Insecticides. Soap volumes were soft on destocking due to price rises

Godrej Consumer Products’ Q3 business update highlighted temporary headwinds. Flat Q3 volumes (vs. average ~7% y/y organic growth in H1 FY25 and in the last six quarters) are expected due to challenges in soaps and home insecticides (HI), which account for nearly two-thirds of domestic revenue.

Godrej Consumer Products (GCPL) pointed to a weak Q3FY2025 in its pre-quarter business update affected by flat sales volumes and a margin dip in the India business. Domestic sales volumes growth would be flat (vs. average 7% volume growth in last six quarters) owing to lower soap sales and HI sales volumes (that contribute ~67% to India business).

With 2% y/y consolidated revenue growth (vs. the Street’s estimated 1%) and Rs7.6bn EBITDA (Rs7.5bn), Godrej Consumer’s Q2 was broadly in line with expectations.

Compared to Bloomberg consensus, sales were 1% higher but EBITDA beat was 4% as margins came in 60bps above expectations

Godrej Consumer Products Limited’s (GCPL’s) Q2FY2025 performance was in line with expectations with revenue rising ~2% y-o-y (high single-digit domestic volume growth), OPM rising by 70 bps y-o-y to 20.8% and adjusted PAT growing by 12% y-o-y.

Godrej Consumer Products (GCPL) has adopted a growth-oriented strategy that includes pursuing acquisitions, cross-selling, entering new categories, and expanding the Total Addressable Market (TAM) for existing products.

GCPL missed on sales and EBITDA but business is commoditised and volume growth was in line with high single digits guidance

Godrej Consumer Products Limited’s (GCPL’s) Q1FY2025 numbers were below our expectation as currency depreciation hit consolidated sales growth. Revenues decreased by 3% y-o-y; OPM expanded by 203 bps to 21.8%; PAT grew by 14% y-o-y.

IIP: IIP growth eases in Mar'24. SBIN: Continued strong performance across segment. GCPL: Strong volume-led growth across markets. POLYCAB: Strong quarter, strong outlook. ORIENTEL: Strong revenue; profitability falters

Godrej Consumer (GCPL) reported a 6% YoY consolidated net revenue
growth to INR33.8b (exactly in line); constant currency (CC) growth was 30%
YoY in 4QFY24. The India business clocked 12% YoY revenue growth (5%
organic) with a volume growth of 15% YoY (7% organic).