Godrej Consumer Products Ltd.GODREJCP₹1,130.70 -1.92%

Shares of

Godrej Consumer Products Ltd. fell up to 3%, reaching an intraday low of ₹1,120.00 apiece, after the company released a quarterly update indicating that recent government GST reforms would temporarily impact its profitability in the quarter ended September 30, 2025 (Q2 FY26).

The company projects a decline in EBITDA for the quarter at a consolidated level, despite expecting mid-single digit INR revenue growth. This short-term hit to profits is primarily attributed to a transitionary adjustment in India following the implementation of reduced Goods and Services Tax rates.

The Union Government’s recent GST reforms reduced the tax rate from approximately 18% to 5% for nearly one-third of GCPL’s portfolio. This portfolio includes categories like toilet soaps, as well as smaller segments such as talcum powders, shampoos, and shaving creams.

In line with its commitment, GCPL passed on these benefits to consumers effective September 22, 2025. This transition, however, caused distributors and retailers to focus on liquidating existing high-tax inventory. This resulted in a delay of new orders and temporarily deferred consumer purchases, which impacted both growth and profitability for the quarter.

Consequently, the Standalone (India) business is expected to deliver only mid-single digit value growth, supported by low-single digit Underlying Volume Growth (UVG). While the Home Care portfolio continues to show strength with likely high-single digit value growth, the Personal Care segment is likely to decline by low-single digit, heavily influenced by the soaps category. The company, however, remains confident that this is a transitory adjustment and expects the GST reforms to serve as a long-term structural driver for volume-led expansion.

Performance across GCPL’s international markets was mixed:

  • The GAUM (Godrej Africa, USA, and Middle East) cluster is expected to deliver its third consecutive quarter of strong growth, with an anticipated double-digit value and volume growth.
  • The Indonesia market is expected to witness a low-single digit decline in value growth, primarily due to heightened competitive pricing activity across key categories. This segment, however, is expected to show slightly positive UVG.

Note: The stock price mentioned is as of 3:30 pm.

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