Godrej Consumer shares fall 3.82% to 805.05 rupees after second-quarter results
Key Facts
Godrej Consumer shares fell 3.82% to 805.05 rupees on October 30, after touching 777.20 rupees during the session, following the release of results for the September quarter of fiscal 2027, according to NDTV Profit. The decline came as results fell short of analysts’ estimates, with higher costs weighing on margins. Consolidated operating revenue rose 19% to 4,413.09 crore rupees from 3,708.19 crore a year earlier, according to data reported by Business Standard, citing PTI. Consolidated net profit also rose 13.84% to 522.92 crore rupees, compared with 459.34 crore in the corresponding period. Even so, revenue and profit growth remained below NDTV Profit’s expectations ahead of the results.
Consolidated sales volume grew 8%, while consolidated sales rose 19% year on year, according to Business Standard, citing PTI. In India, sales volume increased 7%, home care revenue grew 19% and personal care revenue rose 8%, according to NDTV Profit. Revenue in Indonesia, the company’s second-largest market, reached 538.29 crore rupees, up 20.1%. Revenue from its Africa business, including Strength of Nature, rose 47% to 1,070.54 crore rupees, according to the same report. Chief Executive Officer and Managing Director Asif Malbari said the company recorded broad-based volume growth across India, Indonesia and Africa despite weak monsoon conditions in India, while benefiting from favorable factors in Indonesia.
Profit growth did not keep pace with revenue growth: earnings before interest, taxes, depreciation and amortization rose 11.7% to 820 crore rupees from 734 crore a year earlier, while its margin fell to 18.6% from 19.8%. Gross margin also contracted 300 basis points year on year, according to NDTV Profit. Net profit was 523 crore rupees, against an estimate of 551 crore, while revenue came in at 4,413 crore, compared with expectations of 4,422 crore. Earnings before interest, taxes, depreciation and amortization were 820 crore rupees, below the estimate of 835 crore, according to NDTV Profit figures. Business Standard data, citing PTI, showed that total expenses rose 20.6% to 3,758.26 crore rupees in the quarter.
On costs, raw material costs rose 8.5%, while the cost of purchasing finished goods increased 61.3%, alongside a 20.6% rise in total expenses, according to Reuters via Marketscreener. The company said the input cost environment remained highly challenging during the quarter, as inflation accelerated in crude oil derivatives, palm oil and other commodity inputs. In an earlier update, the company had flagged renewed inflation in crude oil derivatives and palm oil, saying it was addressing the pressures through calibrated pricing actions, cost savings and greater supply chain efficiency. The cost pressure came in results that combined volume growth in key markets with margin contraction. The comparison between revenue growth of 19% and operating profit growth of 11.7% shows the widening gap between business expansion and profitability during the period.
The company maintained its fiscal 2027 guidance for high single-digit growth in standalone underlying business sales volume and double-digit growth in consolidated revenue and earnings before interest, taxes, depreciation and amortization, according to its update reported by Reuters. Malbari also said the company remained committed to its fiscal-year guidance. Before the results, the company had forecast high-teen growth in second-quarter consolidated revenue, high single-digit growth in underlying volume and double-digit growth in operating profit, according to Reuters. It also announced an interim dividend of 5 rupees per share on October 29, according to NDTV Profit. Among analysts, Jefferies maintained its buy recommendation but cut its price target to 1,075 rupees from 1,400 rupees and lowered its earnings-per-share estimates for fiscal 2027 and 2028 by 3%, citing higher input costs.