Godrej Consumer Products bullish on demand revival amid easing inflation, tax cuts
New Delhi: Godrej Consumer Products Ltd (GCPL) is betting on easing food inflation, tax cuts, and upcoming pay commission hikes to revive consumer demand over the next 12 to 18 months, CEO Sudhir Sitapati said on Wednesday.
Despite lingering headwinds in its core soaps business due to a surge in palm oil prices, the company expects demand to pick up as inflation stabilizes and the impact of government welfare schemes kicks in.
For the March quarter, GCPL reported a 6% rise in consolidated volumes and a 6.2% increase in revenue to ₹ 3,597.95 crore. But the company's broader strategy hinges on a pivot to emerging categories like pet care, liquid detergents, and deodorants, where it sees higher growth potential even as its soaps segment remains under pressure.
Sitapati expressed confidence in the outlook for FMCG demand, citing factors like reduced food inflation and the government's income tax cuts and welfare schemes.
'We are bullish about consumer demand over the next 12 months for a variety of reasons. The El Nino effect basically took up food prices in India last year. Food price inflation has an immediate impact on FMCG consumption. Now that El Nino has reversed, food price inflation has come down in the January to March period,' he said. 'We should see some kind of demand coming back,' he added.
GCPL's performance in the March quarter reflects this cautious optimism. Its consolidated revenue from operations grew 6.2% to ₹ 3,597.95 crore, with a profit of ₹ 411.90 crore, compared to a ₹ 1,893.21 crore loss a year ago. For FY24, the company saw a 2% rise in revenue from operations, totaling ₹ 14,364.29 crore.
However, the company acknowledged the persistent challenges posed by inflationary pressures, particularly the sharp rise in palm oil prices, which have affected its Ebitda margins.
Sitapati referred to the inflationary spike as a "short-term blip" and defended the company's decision to limit price hikes, passing on only 15–16% of the palm oil price increase to consumers rather than shocking the market with higher prices.
Looking ahead, GCPL is shifting focus toward high-growth, under-penetrated categories, even as the soaps business continues to feel the impact of rising input costs. The company sees significant growth opportunities in body wash, liquid detergents, deodorants, air fresheners, pet care, and sexual wellness.
In 2023, GCPL acquired the fast-moving consumer goods business of Raymond Consumer Care Ltd (RCCL), adding brands like Park Avenue deodorants and KamaSutra sexual wellness products to its portfolio. In April 2024, the company launched its pet care brand, 'Godrej Ninja,' in Tamil Nadu, leveraging the group's marketing and manufacturing strengths.
Additionally, GCPL made a strong move in liquid detergents with the launch of Fab Liquid, priced at ₹ 99, which achieved an annualized revenue run rate of ₹ 250 crore within 12 months. The company is also introducing more affordable products in its deodorant range, including a ₹ 99 antiperspirant, Block, and a reduced-price KamaSutra deodorant.
Another segment poised for growth is household insecticides.
GCPL's brands, Goodknight and Hit, saw double-digit growth in the March quarter. The company is also expanding in the category with innovations like a patented molecule (RMF) in its electric and incense formats, aiming to disrupt the market for illegal incense sticks and drive product and consumer awareness.
GCPL anticipates mid-to-high single-digit volume growth in FY26, with high-single-digit revenue growth and double-digit Ebitda growth for FY25.
The company expects a recovery in profits once palm oil prices stabilize, which should help support margin expansion in the coming quarters.
Sitapati remains optimistic that GCPL's focus on the "categories of tomorrow" will help the company weather short-term challenges and position it for long-term success.
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