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    Godrej Consumer

    GODREJCPNeutral
    Fast Moving Consumer Goods·7 Aug 2025
    Management Summary

    GCPL had a good Q1 with strong underlying momentum ex-soaps (mid-teens volume growth). HI delivered breakthrough results with unprecedented share gains in Electrics from the RNF molecule relaunch. Soaps were weak due to sharp grammage cuts and poor North India season. Africa was outstanding (+30% sales) while Indonesia faced macro headwinds. Margins were below normative levels due to soap margin pressure and strategic price cuts in HI aerosols and hair color. H2 margin recovery expected.

    Highlights

    9

    • Consolidated revenue grew 10% with 8% underlying volume growth

    • India ex-soaps delivered mid-teens underlying volume growth

    • India revenue grew 8% with 5% volume growth; EBITDA declined 6%

    • HI grew high single-digit volumes led by Electrics in double digits; unprecedented market share gains from RNF molecule

    • Soaps impacted by grammage cuts and poor May season in North India

    • Africa delivered 30% sales growth and 15% EBITDA growth

    • Indonesia impacted by macro slowdown and competitive pricing pressures

    • 150-200bps A&P savings on track from media renegotiations

    • New launches performing well: Fab, Goodnight Agarbatti, AirPlug, Bloq

    Concerns

    2

    • Soap margin pressure from palm oil and grammage cuts

    • Indonesia macro slowdown and competitive pricing

    What Changed2

    vs Q1 FY26

    Tone shiftCandid and realistic about challenges; proactively revised guidance downward rather than maintaining unachievable targets → Honestly candid about challenges; confident on strategic direction; measured optimism for H2 recoveryGuidance items5 → 6 (+1)

    Key financials

    Single quarter

    10 metrics
    1. 01Consolidated Revenue Growth10%
    2. 02Consolidated Volume Growth8%
    3. 03Consolidated EBITDA Growth-3%
    4. 04India Revenue Growth8%
    5. 05India Volume Growth5%

    Guidance & targets

    5
    CategoryTargetPriority
    Volume
    FY26 standalone UVG
    Mid-to-high single digit
    		High
    Revenue
    FY26 consolidated revenue growth
    High single digit
    		High
    Margins
    India standalone EBITDA margins
    Below normative in H1, normative (24-26%) in H2
    		High
    Cost
    A&P savings
    150-200bps
    		High
    HI
    HI volume growth trajectory
    High single digit
    		High

    Risks & concerns

    5
    RiskSeverity

    Soap margin pressure from palm oil and grammage cuts

    Godrej No.1 grammage cut from 56g to 44g on INR10 packs; 70% of soap business in North India — Management acknowledged

    high

    Indonesia macro slowdown and competitive pricing

    Sharp slowdown in Indonesian economy; competitors dropping prices on HI and air fresheners — Management acknowledged

    high

    Incense sticks cannibalization of premium HI

    Incense sticks growth continues unabated, preventing overall HI share gains despite Electric gains — Management acknowledged

    medium

    Consolidated EBITDA declined 3% despite 10% revenue growth

    Strategic price cuts in multiple categories plus soap margin pressure — Analyst acknowledged

    medium

    Africa growth sustainability concerns

    Aer Pocket investment causing slight margin dilution in Africa — Analyst acknowledged

    low

    Q&A highlights

    5

    “unprecedented share gains in Electrics... first time in a decade we have gained share of overall HI... RNF molecule is a competitive moat, exclusivity for some time, lead time for new molecules in India is long”

    Game-changing molecule giving GCPL structural competitive advantage in HI

    asked by Avneesh Roy (Nuvama)

    2 min read4 chapters

    Detailed Narrative

    01

    RNF Molecule Delivering Breakthrough HI Performance

    The RNF molecule relaunch is delivering unprecedented🌐 results in Electrics with very high Nielsen share gains - the first time in a decade GCPL has gained overall HI share in a regular quarter. The molecule provides competitive moat with exclusivity and long lead times for competitors. HI is transitioning from zero/low single digit to high single digit volume growth. However, fast-growing incense sticks segment continues to offset Electric gains in overall HI share calculation.

    02

    Multiple Strategic Price Reductions to Drive Penetration

    GCPL made deliberate price cuts across several categories: (1) HI aerosols benchmarked to global pricing, (2) Hair color large pack reduced from INR42 to INR37, (3) Deodorant channel margin restructured with INR99 MRP in Tamil Nadu pilot showing explosive volume growth. Strategy is to sacrifice short-term margins for volume growth, then recover margins through structural cost savings (media negotiations, new factories, supply chain). A&P savings of 150-200bps on track.

    03

    Soap Segment Under Severe Pressure

    Soaps experienced significant volume decline driven by sharp grammage cuts (56g to 44g on INR10 packs over 12 months) and a very poor May season in North India (70% of soap business). Unit growth was in double digits despite volume decline, confirming underlying consumption is intact. Market share gains continue but at a lower pace. Palm oil import duty cut helping domestic PFAD pricing. Full recovery expected to take 2-3 quarters as grammage bases annualize.

    04

    International: Africa Strong, Indonesia Challenged

    Africa delivered exceptional 30% sales growth with ~10-12% from base corrections after dealer inventory reduction. Aer Pocket launched across Africa with strong consumer response. LatAm doing well with high single-digit UVG and double-digit EBITDA margins. Indonesia impacted by macro slowdown🌐 - competitive pricing pressure in HI aerosols and air fresheners. GCPL corrected 7-8% price gap. Management believes this is temporary; margins may have bottomed.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.