Godrej Consumer Products Shares Dip 3% to Six-Month Low Amid Q2 Profit Alert

Shares of Godrej Consumer Products Ltd (GCPL) faced selling pressure in today’s trading session, slipping 3% to ₹1,120 apiece, marking a six-month low. The decline comes after the company flagged a potential dip in its second-quarter profitability, following temporary disruptions caused by recent GST rate cuts.

Market Performance

• Current Share Price: ₹1,120
• Decline: 3%
• Trend: Six-month low

Investors reacted to GCPL’s business update indicating that GST-related adjustments have temporarily slowed sales and impacted margins.

Company Update: Q2 Business Performance

In its latest Q2 update, GCPL highlighted that:

• Recent GST rate cuts caused short-term trade disruptions.
• Distributors and retailers prioritized clearing older inventories before placing new orders.
• Consumer purchases were temporarily deferred, affecting both growth and profitability.

As a result, the company expects:

• Standalone Business: Mid-single-digit value growth, supported by low-single-digit underlying volume growth (UVG).
• Consolidated Revenue: Mid-single-digit growth in INR terms.
• EBITDA: Likely decline for the quarter due to the transitional impact of GST.

Segment-Wise Insights

• Home Care: Strong momentum continues, likely delivering high-single-digit value growth.
• Personal Care: Expected to face a low-single-digit decline, primarily driven by softness in the soaps segment.
• International Markets:
  • Indonesia: Competitive pricing pressures may result in low-single-digit value growth decline, with slightly positive UVG.
  • GAUM (Africa, USA, Middle East): On track for its third consecutive quarter of robust topline growth, with double-digit value and volume gains.

The company noted that these effects are temporary and emphasized the long-term benefits of the GST reforms on business efficiency and trade flows.

Recent Stock Trend

GCPL’s stock has been under pressure for the past few months. Key points include:

• The stock hit an all-time high of ₹1,541 last year but has since declined by 27.31%.
• After showing some recovery in March and April, momentum could not be sustained.
• The last two months ended in cumulative losses of 7.3%, and the decline continues into October.

The recent dip reflects both market adjustments and short-term operational challenges following GST rate changes.

Summary

GCPL’s Q2 outlook highlights:

• Temporary disruptions in trade channels due to GST rate cuts.
• Short-term pressure on profitability, particularly EBITDA.
• Mixed performance across segments, with Home Care performing well and Personal Care facing minor declines.
• Continued growth in international operations, especially in Africa, USA, and Middle East markets.

While the stock currently trades near six-month lows, the company remains focused on navigating transitional challenges and sustaining growth in key segments over the long term.