GCPL sees growth revive in Q3 with home care business doing the heavy-lifting
GCPL's Q3FY26 pre-quarterly update signals a significant turnaround, led by domestic consumption revival.
Godrej Consumer Products Ltd (GCPL) signals a gradual consumption recovery over the next few quarters, with improving demand conditions in the December quarter (Q3FY26). Easing inflation and a better affordability after the goods and services tax rate rationalization would aid revival.
In its Q3FY26 pre-quarterly update, GCPL stated that consolidated revenue (in rupee terms) would be close to double digits, driven by double-digit volume growth in the India business. Also, the India business Ebitda margin is expected to return to normalized levels, which have been in the 24-26% range, helped by favourable input costs, calibrated pricing, and operating leverage. Consolidated Ebitda growth will also be in double digits. Ebitda is short for earnings before interest, taxes, depreciation, and amortization.
These are better than initial estimates by some brokerages. “We believe it (revenue) would have grown by 9.5% year-on-year, better than our earlier estimate of 6.7% on-year," said Nomura Global Markets Research report dated 6 January. Nomura is now pencilling in an Ebitda growth of around 12.8% on-year, above its expectation of a 9.5% on-year rise.
The home-care segment, which accounted for 27% of its FY25 consolidated sales, is at the driver’s seat and is expected to deliver double-digit value growth in Q3FY26. Notably, the pickup has come despite an unfavourable winter, which would typically weigh on household insecticide sales.
An uptick in sight
Personal care (soaps, hair colours, deodrants), contributing 32% of FY25 consolidated sales, is expected to post mid-single-digit growth led by a recovery in soaps after nearly 10 quarters of flat or negative performance. Importantly, ex-soaps volumes had already been growing in double digits, suggesting the underlying India business was healthier than headline numbers implied. This marks a clear improvement from H1FY26, when India volumes grew by just about 4%.
On the flipside, the contribution of international business remains uneven. Overseas operations accounted for about 39% of FY25 sales. Indonesia, which contributes 14%, has shown early signs of stabilization, but it is still expected to see a decline on-year amid pricing pressure, with recovery only from FY27.
According to Nuvama Research, Indonesia business would see sales decline of 3% on-year in Q3FY26 and muted 2% on-year volume growth, but Nuvama believes the worst is behind. In contrast, the GAUM (Godrej Africa, US, and Middle East) business continues to deliver strong double-digit growth on key parameters.
Meanwhile, in the past year, the GCPL stock has been up a mere 8%. If this performance sustains, then GCPL can exit its weak phase and may be on track to deliver high single-digit consolidated revenue growth in FY26, mainly supported by an uptick in domestic volumes. But, at around 44x FY27 price-to-earnings, according to Bloomberg data, valuation already captures a fair degree of optimism.
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