Godrej Consumer Products Limited — Q1 FY26 earnings call

Call held 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

  • 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

  • Soap margin pressure from palm oil and grammage cuts

  • Indonesia macro slowdown and competitive pricing

Key financials

  1. Consolidated Revenue Growth 10%
  2. Consolidated Volume Growth 8%
  3. Consolidated EBITDA Growth -3%
  4. India Revenue Growth 8%
  5. India Volume Growth 5%
  6. India ex-Soaps Volume Growth 15 % (mid-teens)
  7. India EBITDA Growth -6%
  8. Africa Sales Growth 30%
  9. Africa EBITDA Growth 15%
  10. LatAm Volume Growth 8 % (high single digit)

What they filed

Q1 FY27: revenue up 9.7%, net profit up 2.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,301 2,262 2,161 2,330 2,390 +4%2,466 +9%2,360 +9%2,557 +10%
EBITDA559 513 494 502 520 −7%625 +22%588 +19%557 +11%
Net profit393 342 248 355 356 −9%383 +12%422 +70%363 +2%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Volume

  • FY26 standalone UVG Volume · FY26 · High confidence Mid-to-high single digit
    we are on track for mid-to-high single-digit UVG for standalone business

    — Sudhir Sitapati

Revenue

  • FY26 consolidated revenue growth Revenue · FY26 · High confidence High single digit
    high single-digit consolidated INR revenue growth

    — Sudhir Sitapati

Margins

  • India standalone EBITDA margins Margins · H2 FY26 · High confidence Below normative in H1, normative (24-26%) in H2
    in the second half go close to our normative kind of margins

    — Sudhir Sitapati

Cost

  • A&P savings Cost · FY26 · High confidence 150-200bps
    on track to deliver 150 bps to 200 bps of savings in A&P investments

    — Sudhir Sitapati

HI

  • HI volume growth trajectory HI · Ongoing · High confidence High single digit
    moving from a zero to low single digit volume growth to a high single digit volume growth in HI

    — Sudhir Sitapati

Market context

  • FY26 consolidated EBITDA growth Profitability · FY26 · Medium confidence Double digit
    double-digit consolidated EBITDA growth for the full year

    — Sudhir Sitapati

Risks & concerns

  • Soap margin pressure from palm oil and grammage cuts

    high

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

    Management benefits of palm moderation to come in h2; grammage cuts annualizing

  • Indonesia macro slowdown and competitive pricing

    high

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

    Management seen as temporary; 7-8% price gap corrected; margins may have bottomed

  • Incense sticks cannibalization of premium HI

    medium

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

    Management gaining share within electrics to compensate; waiting for incense sticks growth to taper

  • Consolidated EBITDA declined 3% despite 10% revenue growth

    medium

    Strategic price cuts in multiple categories plus soap margin pressure

    Analyst h1 margins below normative; h2 recovery expected through cost savings and soap recovery

  • Africa growth sustainability concerns

    low

    Aer Pocket investment causing slight margin dilution in Africa

    Analyst 10-12% of growth from base correction; double-digit growth sustainable for near-term

Q&A highlights

5 direct
RNF molecule impact on HI market share Direct
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)

Fab detergent competition from Unilever Sunlight Direct
Fab continues to do extremely well... We have taken up prices by 5% on Fab and have seen no impact despite price competition... We will play a branded game, not a pricing game

Fab maintaining growth momentum and pricing power despite aggressive competition

Asked by Aditya Soman (CLSA)

Strategic price cuts in HI aerosols and hair color Direct
India was an overpriced market compared to our own Indonesia market... we've thrown the kitchen sink, new formulation and dropped the price

Deliberate strategy to boost penetration; margins to be recovered through cost savings

Asked by Karthik Chellappa (Indus Capital)

Indonesia competitive pressures Direct
primarily macro... margins may have bottomed out... I have a feeling the pressure should lift by Q3

Indonesia seen as temporary macro issue, not structural; pricing gap of 7-8% already corrected

Asked by Percy Panthaki (IIFL)

Deodorant channel margin restructuring (INR99 strategy) Direct
Tamil Nadu pilot: doubling of volumes and volume shares... we have best distribution among top three players to capitalize on this

INR99 price point strategy showing explosive results in pilot; potential to transform category

Asked by Nihal Jham (HSBC)

2 min read 4 chapters

Detailed narrative

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.

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.

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.

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.

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