GODREJCP - Godrej Consumer Products Ltd. Share Price

Management's outlook for Godrej Consumer Products Ltd. (GCPL) emphasizes a positive trajectory moving forward, particularly in the second half of FY26. Key forward-looking points include:

1. Volume Growth: Management anticipates that the standalone business, excluding soaps, will achieve mid-to-high single-digit underlying volume growth (UVG) for FY26, while consolidated revenue growth is expected to be in the high single digits.

2. Revenue and EBITDA Growth: For FY26, management projects high single-digit revenue growth in INR terms and double-digit growth in consolidated EBITDA. The expectation is that improved performance will be realized sequentially in FY26, with the second half expected to outperform the first half in terms of margin.

3. Margins Expectations: Standalone EBITDA margins in H1 FY26 are anticipated to be below standard levels but are expected to improve in the second half. This improvement is highly dependent on moderating raw material costs, particularly palm oil prices, which have started to show signs of stabilization.

4. A&P Investments: Management is targeting cost savings of 150 to 200 basis points in advertising and promotion (A&P) investments without sacrificing media reach, achieved through better planning and negotiations.

5. International Performance: The Africa business has shown strong growth, with 30% sales growth and 15% EBITDA growth. However, the Indonesia business continues to face macroeconomic headwinds and pricing pressures, which management believes to be transitory. They expect the situation to improve in the coming months.

6. Product Innovations: Successful new product launches, including Aer Pocket in Africa and competitive pricing strategies in various segments, are expected to contribute positively to overall category growth.

In summary, GCPL's management appears confident in recovering margins and achieving growth, particularly in the second half of the fiscal year, despite current challenges in certain markets.

Question from Aditya Soman: You indicated the impact of the early monsoons potentially on soaps. Was there also a similar positive impact on home insecticides given that we had an early rain? And about the liquid detergents business, with Unilever being aggressive, do you see this as a challenge?

Answer: For household insecticides, the infestation index was only average this quarter. April was particularly hot, which impacted volumes. In terms of Fab, it continues to gain share and our mix remains strong, even with a 5% price increase recently that did not affect volume.

Question from Avneesh Roy: How much is the decline in coils for India HI? And regarding Q2, high monsoons typically flood mosquito larvae, which could impact HI demand. Any concerns?

Answer: I can't give specific coil numbers, but we're experiencing sustained high single-digit growth and are optimistic. For Q2, it's too early to tell; last year's monsoon affected mosquito populations, but we hope for a better season this year given past trends.

Question from Percy Panthaki: What has changed for the soaps volume growth this quarter?

Answer: Our soap volumes have declined, affected by sharp grammage cuts and a poor season in May. However, our ex-soaps business has seen mid-teens growth despite challenges in the soap category.

Question from Karthik Chellappa: How do you see the standalone margins trending on a year-on-year basis, excluding soaps?

Answer: Margins on ex-soaps have dipped slightly due to some price corrections in household insecticides and hair color. However, aggressive cost-saving measures are in place, and we expect to recover margins over the year.

Question from Mihir Shah: Is the growth in Africa sustainable, and what's the long-term outlook?

Answer: With interventions made over the last year, we expect to sustain double-digit growth in Africa. However, part of the growth may relate to base corrections from previous inventory adjustments.

Question from Nihal Mahesh Jham: Can you provide feedback on the deodorant portfolio revamp?

Answer: We're pleased with the results in Tamil Nadu. We've noticed a doubling of volumes and revenue after adjusting pricing, showcasing a strong consumer response to the INR99 strategy.