Mumbai: Godrej Consumer Products Ltd said its quarterly profit rose 29%, but its shares ended down more than 13% on Wednesday as it said it was concerned about vegetable oil prices and a firmer rupee.
The maker of soaps and household-care products said consolidated net profit in the fiscal fourth quarter to 31 March rose to Rs39.36 crore from Rs30.6 crore a year earlier. Net sales rose 26% to Rs242 crore.
Godrej Consumer, India’s second-largest soap maker behind Hindustan Unilever Ltd, has nearly 10% of the market for soaps, and raised its prices by 5-8% in April. Soaps make up 63% of its revenue.
“Palm oil prices have been rising, so it’s good they raised prices, but a larger share of their revenue is coming from low-end soaps, and that’s not so good,” said Hemant Patel at Enam Securities, who had an “outperformer” rating on the stock.
“Margins are not likely to improve quickly, with pressure also in hair colour from premium brands like L’Oreal.”
Godrej Consumer’s stand-alone operating margins during the quarter fell to 17.4% from 21.7%.
Its shares ended down 13.2% at Rs143.80 in a Mumbai market that rose 0.6%. The shares fell almost 24% from an intra-day high of Rs178 and have now unwound almost all their gains since closing at Rs143.05 on 2 April.
Mumbai-based Godrej, which has a 36% share of the hair-colour market, began production of hair colour and toiletries in a new plant in the northeastern state of Sikkim in March. Godrej, which formed an equal joint venture with Sweden’s SCA Hygiene Products AB in March, is setting up manufacturing facilities to make sanitary napkins and diapers.