For GCPL, growth initiatives offer a ray of hope but cost pressures loom
Subscribe to enjoy similar stories. Godrej Consumer Products Ltd’s (GCPL) September quarter (Q2FY25) update highlights the challenges of tackling inflationary pressures and simultaneously pursuing growth. Its India business is likely to report high single-digit volume growth year-on-year.
Analysts expect GCPL’s Q2 domestic volume growth to be about 7%, against 8% and 9% growth in Q1FY25 and Q4FY24, respectively. The management has decidedto continue investing in long-term growth initiatives such as the rural van program and new category development. Liquid detergents have surged, with revenue growth exceeding 40%, while hair colour revenue is growing in the early teens, said analysts at Nuvama Research.
In the household insecticides category, premiumization efforts are underway, led by strong traction in newly launched incense sticks and an expected boost from the relaunch of liquid vaporizers featuring a new molecule, which should boost growth from low-single-digit in the coming quarters. Still, not all segments are firing fully. The soap category, a core part of GCPL's portfolio, has seen muted volume growth.
Unlike market leader Hindustan Unilever Ltd, GCPL is yet to adjust its soap formulations, though it has the technology ready when needed. “India Ebitda growth is likely to be flat this quarter due to steeper cost challenges and margin dilution in soap (partly due to HUL's disruption), which is one third of the domestic business," pointed out Nuvama. Cost inflation is a worry,particularly palm oilinput costs, which have been rising since March and have risen in the high teens as of date.GCPL has been gradually raising prices while absorbing a part of the burden instead of immediately passing on cost increases to
. Read more on livemint.com
