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Home and personal care concentration has helped GCPL drive relatively better growth in India with 7% value and volume growth in Q2. Although, amid the inflationary stress, EBITDA stood flat in India and is likely to be stressed in 2H, given the high base. International sales remain muted with a 5% decline; the management expects revenue growth to turn positive from Q4. Focus on profitability remained, and International EBITDA expanded 37% YoY; 2H is likely to sustain healthy growth momentum. Factoring in the near-term margin stress, we cut earnings by 4-7% over FY25-27E. Given improved execution, better margin delivery, and enhanced focus on return profile, we continue to value GCPL at 52x P/E. We maintain ADD with new Sep-25E TP of Rs1,375 vs Rs1,450 earlier. We see 10% sales and 18% earnings CAGR over FY25-27E.

India business saw 7% growth, whereas EBITDA stood flat in Q2

The domestic Q2 show stood in line with 7% sales growth, driven by 7% volume growth. Home care sales grew 11%, aided by steady double-digit momentum in air fresheners and liquid detergents. Personal care had a muted show with 3% sales growth. GCPL saw double-digit volume growth in hair color and the Raymond portfolio, whereas volume stood flat for personal wash. EBITDA was flat YoY at Rs5.5bn with margin contraction of 160bps YoY to 24.3%. Management has cautioned on margin pressure ahead from inflationary palm oil, where it is looking to partly absorb the pressure. For FY25, we see ~8% revenue growth, while over FY25-27E we expect ~9% CAGR. EBITDA growth is likely to be flat YoY in FY25E, which on expected easing in palm oil prices ahead, should help the company drive double-digit EBITDA growth over FY26-27E.

International decline arrested (at ~5%), EBITDA growth remains robust

Indonesia business saw an improved show with 9% reported and 11% constant currency sales growth. Indonesia EBITDA margin at 19.4% for Q2, expanded by 140bps YoY, leading to EBITDA growth of 17% YoY. Africa cluster had muted topline show with sales falling 21% on reported and 12% in constant currency terms. The Organic Africa cluster reported sales drop of 10% with flat constant currency growth. Focus on profit growth remained, where Africa EBITDA saw 34% growth YoY, aided by 590bps expansion in margin to 14.4%. Sales in LATAM and other regions grew 36% YoY, with EBITDA margin at 5.7%. After ~5% decline in International revenue in FY25, we build in low-double digit growth for FY26-27E. Focus on profitability will aid healthy International EBITDA CAGR of 20% over FY24-27E. International EBITDA margin to see steady expansion to 19% by FY27E from 13% in FY24.

External setting to hurt execution; maintain ADD

GCPL’s execution stood relatively better in the sector, but the high base is likely to reflect on muted earnings ahead. We await easing in palm prices before turning positive on the stock. We maintain BUY with new Sep-25E TP of Rs1,375 (vs Rs1,450 earlier).

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