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Healthy volume delivery; margin recovery likely in 2HFY26

• Godrej Consumer’s (GCPL) consolidated revenue rose 10% YoY to INR36.6b (est. INR36.8b), while volume growth stood at 8%. EBITDA declined 4% YoY (est. +4%) due to weak India and Indonesia margins.
• India’s revenue rose 8%, while volume grew 5%. Ex-soaps, volume growth was in mid-teens. Home Care delivered 16% revenue growth. HI delivered high single-digit volumes, led by double-digit growth in electrics. Air Fresheners and Fabric Care delivered strong double-digit volume growth.
• The Personal Care portfolio posted 1% YoY revenue growth. Personal Wash witnessed a price-volume rebalancing due to commodity volatility, resulting in flattish revenue. Hair Color volume grew in strong double digits. Deodorants and Sexual Wellness grew in mid-teens.
• International revenue rose 15% despite Indonesia clocking a 4% decline. GUAM and LATAM reported strong ~30% growth. In Indonesia, macro headwinds and increased competitive pricing intensity led to a flat UVG.
• India’s EBITDA declined 6% YoY, impacted by sustained GM pressure (500bp down), which was fueled by strategic price reductions in aerosols and hair color. Meanwhile, soap margins remained under pressure due to elevated inventory costs. International EBIT remained flat YoY, weighed down by intensified pricing competition in Indonesia (9% EBIT down).
• The Indian business is gradually getting back on track for accelerated volume growth, with 1Q performance reinforcing confidence in an improving trajectory. With palm oil prices easing towards end-June, the company is well-positioned for margin recovery in 2HFY26, supporting overall profitability. This combination of volume traction and margin tailwinds strengthens earnings visibility. We model 11%/13% revenue and EBITDA CAGR for FY25-28E.
• The company is on track to expand its TAM and strengthen its core portfolio. Under project Vistaara 2.0, the company plans to double its outlet coverage and triple its village coverage. Given the growth-centric focus, we remain constructive on GCPL and reiterate our BUY rating with a TP of INR1,400 (based on 50x Jun’27E EPS).

India’s (ex-Soap) UVG in mid-teens; miss on margin

Consolidated performance 

• Healthy volume growth: Consol. net sales grew 10% YoY to INR36.6b (est. INR36.8b). Consolidated volume growth was 8%.
• Pressure on margins: Gross margins contracted 400bp YoY to 51.9% (est. 52.5%). Employee expenses rose 11%, other expenses rose 11%, while ad spends declined 5%. EBITDA margin contracted 280bp YoY to 19% (est. 20.5%). The company remains on track to achieve ~200bp savings in media investments, without any compromise on reach or brand visibility.
• Miss on profitability: EBITDA declined 4% YoY to INR6.9b (est. INR7.5b). PBT was at INR6.3b (est. INR6.8b), down 4% YoY. APAT was flat YoY at INR4.7b (est. 5.1b).
• International performance: Indonesia’s revenue declined 4% both in INR and CC terms. Volume growth was flat, impacted by macro headwinds and intensified price competition. In Indonesia, Hair Colours continued its strong performance and delivered double-digit growth, led by Shampoo Hair Colour. Baby Care continued to grow and gain market share. The Indonesian business’s EBITDA declined 13% due to competitive pricing. GAUM’s revenue grew 30%, while EBITDA rose 15%. In GAUM, new products in Hair Fashion are performing well across key markets, while the Aer Pocket launch in Nigeria, South Africa, Mozambique, and Zambia has seen strong traction and repeat sales. The Hair Care range continues to deliver robust double-digit growth across Africa.
• Standalone performance: Net sales (including OOI) grew 8% YoY to INR23.1b in 1QFY26. The Indian business reported underlying volume growth of 5% YoY (in line). Ex- Soaps, India’s UVG growth was in mid-teens. The Home Care business registered robust 16% revenue growth, while Personal Care posted 1% growth. Gross margin contracted 510bp YoY to 51.3%. GP declined 2%, with EBITDA margin contracting 320bp YoY to 21.6% (est. 22.9%). EBITDA declined 6% YoY to INR5.9b.

Highlights from the management commentary

• Consumption trends are improving modestly, with this quarter being slightly better than the previous one. Growth was relatively easier than in earlier quarters, especially outside of soaps.
• GCPL expects normative margins to return in 2HFY26 through: 1) Cost-saving initiatives: ANP efficiency, media negotiations, supply chain improvements from new factories and 2) No major structural margin correction anticipated in Indonesia.
• In India, management has guided for high single-digit UVG, high single-digit revenue growth in INR terms, and double-digit EBITDA growth for FY26.
• Indonesia: Margins are expected to recover from 3Q, assuming no further competitive disruptions. Valuation and view
• We cut our EPS estimates by 5% each for FY26 on account of a miss on margin, while we maintain estimates for FY27.
• GCPL faced demand headwinds in its Indian business during the quarter due to grammage reduction in soaps, which impacted margins. However, palm oil prices began to moderate towards the end of June. The benefits of this decline are expected to flow through only in 2HFY26. The company’s disruptive innovations, introduction of access packs, and expansion into new growth categories are likely to contribute to the growth trajectory. Additionally, savings in media spends of 200bp will also help restore margins.
• Besides, there has been a consistent effort to fix gaps in profitability/growth for its international business. We reiterate our BUY rating with a TP of INR1,400 (based on 50x Jun’27E EPS).

Highlights from the conference call Business operations and environment

• Consumption trends are improving modestly, with this quarter being slightly better than the previous one.
• Growth was slightly easier than in earlier quarters, especially outside of soaps.
• The quarter had mixed weather: unusually hot April, poor May in North India, followed by recovery in June.
• Rural demand showed signs of gradual recovery.
• GCPL is optimistic about domestic macro, but cautious due to geopolitical uncertainties and palm oil volatility.
• Pet Care (Ninja brand) launched in Tamil Nadu; initial consumer acceptance is strong, but it is a long gestation category. Cost and margins
• India’s standalone EBITDA declined 6% due to: 1) Margin impact from price cuts in aerosols and hair color and 2) Soaps margin remaining in the low range due to high inventory costs and grammage reduction.
• Ex-Soaps, the portfolio saw mid-teen UVG, but margins slightly contracted due to strategic pricing actions.
• GCPL expects normative margins to return in 2HFY26 through: 1) Cost-saving initiatives: ANP efficiency, media negotiations, supply chain improvements from new factories, and 2) No major structural margin correction anticipated in Indonesia.

Home care Household Insecticides (HI)

• The HI business’s volumes grew in high single digits, led by double-digit growth in electrics.
• GCPL gained unprecedented market share in electrics and, for the first time in a decade, gained share in overall HI.
• New molecule (R&F) has been successful; exclusivity gives competitive moat; strong consumer repeat and recall.
• The incense stick category continues to grow, restricting premium category expansion.
• Future HI volume growth expected to be in high single digits, barring seasonality changes.
• No clear boost from early monsoons; April was too hot and seasonality was average overall.

Air Fresheners

• Air Pocket launched in Africa and other markets have received strong consumer traction.
• GCPL is investing heavily in this category across markets such as Africa and India.

Personal care

Soaps

• Soaps performed poorly due to sharp grammage cuts (e.g., 55g → 43g in INR10 pack) and a weak season in May.
• Market share gain continues but at a slower pace than usual.
• Price increase implemented earlier will mark its anniversary in 2Q and should help improve reported numbers.
• Long-term volume growth is expected to return to 2-3% p.a., in line with population growth.

Hair Color

• The price drop in large hair color packs (INR42 → INR37) is expected to correct the value gap with INR15 pack, which has performed well.
• Margin impact from price correction is expected to be recovered via cost savings.

Deodorants & Antiperspirants

• Amazon Woods 4X launched successfully; consumer traction is strong.
• Block antiperspirant (INR99) aims to build a new habit; slow category build-up expected.
• Strategic shift from trade-led to consumer-led pricing — pilot in Tamil Nadu (MRP cut from INR230 to INR99, with same margin %) resulted in explosive growth.
• GCPL plans to scale this INR99 price-point strategy gradually across markets.

Laundry Liquids

• FAB detergent continues to gain share and consumer acceptance despite competition (e.g., Unilever’s Sunlight at INR70/ltr).
• Price hike of 5% was taken on FAB with no negative impact on volumes. ? GCPL sees FAB as a branded upgrade play from powders, not a pricing war.

Park Avenue and Kamasutra

• Park Avenue and KS are central to GCPL’s personal care strategy, especially in deodorants and the new antiperspirant segment.
• GCPL is transforming the category from high-trade-margin-driven to consumerled through a price architecture reset.
• The INR99 pricing innovation is delivering strong results, especially in pilot regions.
• Block antiperspirant is a long-term strategic bet, aimed at category creation and consumer habit change.
• Distribution strength offers GCPL an edge in driving retail-led adoption of these changes.

International business

Indonesia

• The business was impacted by a macro slowdown and heightened price competition, especially in HI and air fresheners.
• GCPL initially delayed its reaction to pricing aggression but matched prices later in 1Q.
• Price gap was 7-8% higher than competition; now corrected.
• Margin pressures are expected to be temporary, with normalization likely by 3QFY26.

Africa

• Sales grew 30%, EBITDA grew 15%.
• Margin dilution seen due to heavy investments in Air Pocket and on-ground marketing.
• About 10-12% of growth is attributed to base correction from last year’s inventory clean-up.
• Double-digit growth is expected to continue, assuming macro remains supportive.

Latin America

• The market continued to post high single-digit volume growth.
• EBITDA margins are now in double digits. FY26 guidance
• In India, management guided high single-digit UVG, revenue growth of high single-digit in INR terms, and double-digit EBITDA growth for FY26.
• Margin recovery is expected in 2HFY26 as palm oil benefits flow in.
• HI: Maintain high single-digit volume growth guidance.
• Soaps: Expect improvement from 2QFY26 as pricing and season normalize.
• Africa: Sustainable double-digit growth expected.
• Indonesia: Margins to recover from 3Q assuming no further competitive disruptions.

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