Godrej Consumer Reports Double-Digit Volume Rise, GAUM Volumes Fall

Godrej Consumer Products Ltd. (GCPL), a major player in the FMCG sector, reported that operating conditions in the first quarter were challenging. Despite this, the company achieved high single-digit organic volume growth and mid-single-digit value growth in its India business.

In its business update released on July 8, GCPL stated that its overall growth would be in double digits in volume and high single digits in value terms. On a consolidated level, the company expects flat INR sales, double-digit constant currency sales growth, and double-digit EBITDA growth.

"The growth was broad-based across both Home Care and Personal Care. Demand for Household Insecticides had been soft earlier in the quarter due to extreme heatwaves across the country," the company mentioned in its filing. Additionally, the Park Avenue and KamaSutra brands are performing well post-portfolio simplification actions and are aligned with the company’s full-year growth ambitions.

Godrej's Indonesia business showed strong performance, with high single-digit volume growth and double-digit constant currency sales growth. However, significant depreciation of the Indonesian currency has resulted in lower growth in INR terms.

Conversely, the GAUM (Godrej Africa, USA, and Middle East) organic business is expected to experience a double-digit volume decline, primarily due to a high base in the same quarter of the previous fiscal year and challenging pricing decisions in Nigeria. The currency in Nigeria continues to adversely affect Godrej Consumer's INR sales performance. Nevertheless, the company has achieved strong double-digit EBITDA growth in INR terms.

International brokerage Morgan Stanley has retained its equal-weight rating on Godrej Consumer, maintaining a target price of ₹1,231 per share, which suggests a downside of 13.6% from the previous close. Over the past year, the company's shares have risen by approximately 35%, compared to a 25% increase in the frontline Nifty 50 index.