Godrej Consumer Products sustains strong demand with double-digit volume growth

Godrej Consumer Products sustains steady consumer demand

Godrej Consumer Products reported a steady consumer demand in the country, maintaining a consistent performance over the past few quarters in their quarterly update for Q1 FY24. The company's organic business displayed a robust performance, achieving double-digit volume growth due to volume-driven category development. The strong performance was observed across various sectors, with Home Care experiencing double-digit volume growth and Personal Care demonstrating higher than mid-single digit volume growth.

The Hit and Good Knight maker passed on the benefits of lower input costs to its consumers, leading to marginal growth in sales, slightly higher than mid-single digits. The company anticipates high-single digit sales growth when considering both organic and inorganic factors.

Nuvama in its report dated 5 July said that the company's EBITDA is expected to grow 27.6 percent year-on-year led by robust
gross margin expansion.

Analysts at Nuvama said that the organic business in India is projected to grow by 9.5 percent year-on-year, driven by a volume growth of 11 percent. Ad-spends for the company are anticipated to increase, while overall EBITDA margins are to expand by approximately 256bp year-on-year. RCCL will contribute around 6-7 weeks of sales for Q1 FY24, but primary sales are expected to be weak due to inventory reductions. In the international business segment, Indonesia is forecasted to achieve a healthy double-digit growth of 12-13 percent year-on-year, benefiting from a soft base and previous structural changes. EBITDA margins of 20% and YoY EBITDA growth of 20% are expected for Indonesia. HI was weak in April and May due to seasonality but showed improvement in June. Air fresheners are expected to exhibit strong growth, while hair color may be weak due to a high base in Q1 FY23, which saw a 25.3 percent year on year growth in the personal care segment.

The company's Indonesia business demonstrated steady performance, benefiting from structural changes implemented the previous year. In constant currency terms, sales growth in Indonesia is projected to be in the mid-teens range.

In the Godrej Africa, USA, and Middle East (GAUM) region, the company continued to achieve consistent performance, with mid-teens constant currency sales growth. However, adverse currency translation impacted the sales growth in Indian Rupee terms, resulting in high-single digit growth.

“At a consolidated level (organic), we expect to deliver high-single digit volume growth, teens growth in constant currency terms translating to close to double-digit sales growth in INR terms”, the FMCG firm said in an exchange filing.

The company also anticipates double-digit sales growth when considering both organic and inorganic factors. Notably, the company's sustained improvement in the quality of profits is attributed to robust gross margin expansion and ongoing investments in category development, which are expected to drive strong EBITDA growth.

The company foresees an exceptional expense in the form of stamp duty due to the slump sale transaction of Park Avenue and the acquisition of the KamaSutra brand from Raymond group. Despite this expense, the company remains optimistic about its overall performance and growth prospects.

The company announced a significant increase in its consolidated net profit for the fourth quarter ended March 31, 2023. The company's net profit surged by 24.47 percent to reach Rs 452.14 crore, primarily driven by strong volume growth. The revenue grew 9.6 percent, amounting to Rs 3,172.21 crore.