Godrej Consumer Products Navigates GST Transition and International Headwinds in Q2 FY26

Godrej Consumer Products Limited (GCPL) reported a resilient performance in the second quarter of fiscal year 2026, navigating significant market shifts including the GST transition in India and ongoing macroeconomic challenges in Indonesia. The company's consolidated revenue grew by 4% year-on-year, supported by a 3% underlying volume growth. Despite these headwinds, GCPL's India Business, excluding soaps, demonstrated robust underlying volume growth in double digits, underscoring the strength of its core portfolio and execution capabilities. However, consolidated EBITDA margin stood at 19.3%, with net profit before exceptional items declining by 2%.

The quarter saw varied performances across key segments and geographies. In India, sales grew by 4% with volumes up 3%. The recent GST rate reduction, a structural reform aimed at strengthening long-term consumer demand, led to short-term trade disruptions. Distributors and retailers focused on liquidating existing inventories, particularly impacting soaps and hair color categories. Despite this, GCPL continued to gain market share in soaps and other key categories. The Home Care segment delivered a strong 6% growth, driven by air fresheners and fabric care, while Personal Care saw a 2% decline, largely due to the GST-related impact on soaps.

Internationally, the Indonesia business continued to grapple with macro and competitive pressures, resulting in a 7% decline in sales, although it delivered a stable 2% underlying volume growth with market share gains across key categories. In stark contrast, the Africa, USA & Middle East cluster delivered an impressive 25% sales growth in INR terms and 15% in constant currency, coupled with a 20% EBITDA growth, primarily led by strong performances in hair fashion and air fresheners. Latin America and Others segment reported a 9% decline in sales but a 5% constant currency growth.

Strategic Initiatives and New Ventures

GCPL's strategic focus on innovation and market expansion was evident through several key initiatives. The company successfully launched Godrej Spic Toilet Cleaner in select South Indian states, marking its entry into the rapidly growing ~INR 3,000 crore toilet cleaning category. This product is priced competitively at INR 79 for 500 ml and aims to disrupt the market with its distinct stain-preventing formulation.

Another significant development was the acquisition of the FMCG business under the 'Muuchstac' brand. This move positions GCPL strongly in India's fast-growing men's grooming segment, particularly in the men's face wash category. Muuchstac, which generated approximately INR 80 crores in revenue and INR 30 crores in EBITDA over the last 12 months, is a highly profitable brand known for its unique influencer-led marketing model and strong presence in Tier 2 and Tier 3 cities. This acquisition is expected to be EPS-accretive from day one and offers substantial opportunities for distribution expansion across online and offline channels.

Outlook and Management Confidence

Looking ahead, Godrej Consumer Products anticipates a sequential strengthening of its performance in the second half of FY26. Management expressed confidence in achieving high single-digit underlying volume growth for its standalone business and high single-digit revenue growth at a consolidated level for the full fiscal year. India standalone and GAUM businesses are projected to deliver double-digit EBITDA growth. The Personal Wash category is expected to rebound following the GST rate reductions, and standalone EBITDA margins are likely to return to the normative band of 24-26% in H2 FY26.

The company remains committed to its strategy, leveraging the resilience of its portfolio and brand strength. With disciplined execution, continued focus on innovation, and operational excellence, GCPL is well-positioned for sustainable and profitable growth in the periods ahead. The strategic acquisition of Muuchstac and the successful launch of Spic underscore GCPL's proactive approach to market opportunities and category expansion.