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Healthy HI growth, margin pressure sustains

* Godrej Consumer (GCPL) reported consol. net sales growth of 6.3% YoY to INR35.9b (est. INR36.3b). Organic sales rose 7% YoY in INR terms (adjusted to sell of a part of the Africa business).

* Consolidated organic volumes for 4QFY25 grew 6% YoY, led by the 4% YoY volume growth in the India business and a 5% YoY volume growth in the Indonesia business. This led to a full-year organic volume growth of 4% YoY for GCPL’s consolidated business, 5% for the India business, and 6% for the Indonesia business.

* EBITDA remained flat YoY and QoQ at INR7.6b, which was better than the expectation of INR7.3b.

* PBT stood at INR6.7b (est. INR6.6b), down 4% YoY.

* Higher taxes (35% ETR) hurt adj. PAT (reported exceptional loss last year), which declined 25% YoY to INR4.3b (est. INR5.1b).

* Gross margin contracted 360bp YoY to 52.5% (est. 54.5%).

* EBITDA margin contracted 140bp YoY to 21.1% (est. 20.2%) as employee expenses declined 19% YoY, while ad spends rose 1% YoY and other expenses grew 9% YoY.

* In FY25, net sales, EBITDA, and APAT were up 2%, down 2%, and down 4% YoY, respectively.

India business

* Net sales (including OOI) grew 7% YoY to INR21.8b in 4QFY25. ? The India business reported underlying volume growth of 4% YoY.

* GCPL stated that demand conditions in India have continued to be impacted by headwinds in urban consumption. A surge in palm oil prices by more than 50% is adversely impacting its EBITDA margin.

* The home care business registered 14% revenue growth (4% in 3QFY25), while personal care recorded revenue growth of 4% (2% in 3QFY25).

* Gross margin contracted 590bp YoY to 51.9%. GP was down by 4%. EBITDA margin dipped 400bp YoY to 22.6% (est. 23.3%).

* EBITDA declined 9% YoY to INR4.9b (in line).

Category wise highlights

* The home care business registered 14% revenue growth (4% in 3QFY25) buoyed by a good season. GCPL recorded a strong volume performance in Household Insecticides (HI), which grew in double digits.

* In HI, Goodknight Agarbatti has seen a strong outperformance and has become the clear market leader in this category. Premium formats have grown strong double digits, with RNF LV being received well by the consumers. GCPL has gained a notable share among premium formats.

* Air Fresheners continues to perform well, delivering high-single-digit volume growth and continuing to enjoy market leadership. Launched Mini Aer Pocket in a few states in South India at INR 30.

* Fabric Care delivered strong double-digit volume growth. Godrej Fab has been scaled up nationally and continues to gain market share.

* The personal care recorded revenue growth of 4% (2% in 3QFY25). Personal Wash volumes declined by mid-high single digits during the quarter as a result of volume-price rebalancing. This was compensated by high single-digit price growth. GCPL continues to witness significant cost pressures due to inflation in palm derivatives and is taking significant price hikes across the portfolio.

* In personal care, Hair Colour volumes grew in mid-single digits. Godrej Expert Rich Crème access packs continue to perform well and grow at double-digit rates. Shampoo Hair Colour volumes continue to grow at a strong double-digit rate.

International business

* Indonesia's revenue rose 1% YoY in both INR and CC terms with volume growth of 5%.

* In Indonesia, Hair Colour recorded a strong double-digit volume growth, led by Shampoo Hair Colour. Household Insecticides delivered teens volume growth on a 2-year CAGR.

* EBITDA margin for the Indonesian business continued to improve, led by gross margin expansion of ~210bp YoY. EBIT rose 10% YoY.

* GAUM’s organic revenue grew 23% YoY.

* GAUM’s EBITDA margin at 16.9% improved ~250bp YoY, led by gross margin expansion, mix improvement, and reduction in controllable costs. Absolute EBITDA at INR 1160m grew 37% YoY.

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