Godrej Consumer shares fall to 6-month low as firm says GST transition may impact Q2 profit

Godrej Consumer share price

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26 Aug, 2025 12:21

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The shares of Godrej Consumer Products dropped nearly 3 percent to hit a six-month low of Rs 1,120 apiece on October 8. This comes after the FMCG major released its business update for Q2 FY26, stating that the GST reforms may have a short-term impact on its profitability.

In an exchange filing released in the post market hours of October 7, Godrej Consumer Products explained that the latest GST rate cuts have resulted in certain "short-term adjustments" across trade channels, as distributors and retailers focused on liquidating existing inventories. This delayed the flow of new orders and temporarily deferred consumer purchases, adversely affecting both growth and profitability, the firm said.

GST transition likely to impact Godrej Consumer's Q2 profitability:

"Consequently, our Standalone business is expected to deliver mid-single digit value growth, supported by low-single digit UVG. Within our categories, Home Care portfolio continues to demonstrate strong momentum, likely to result in high-single digit value growth, while Personal care is likely to decline low-single digit, largely influenced by the soaps category. We believe this is a transitory adjustment and remain confident in the long-term benefits of the reforms," Godrej Consumer Products said.

The firm anticipates mid-single digit consolidated revenue growth. The GST transition in India will likely bear a short-term impact on profitability, which in turn will lead to a fall in EBITDA for the second quarter of the financial year 2026, it added.

"Despite this temporary adjustment, we remain confident of our plans and are positive of the likely performance in the second half of the financial year," the FMCG company said.

Godrej Consumer's international business:

Speaking about its international business, Godrej Consumer Products said that its Indonesia business continued to see strong competitive pricing activity across key categories, which in turn is expected to result in a low-single digit decline in value growth. "GAUM (Godrej Africa, USA, and Middle East) is likely to deliver its consecutive third quarter of strong topline performance. It is expected to deliver double-digit value and volume growth," it said.

Godrej Consumer share price history:

After hitting its day's low of Rs 1,120 per share, the stock made some recovery and was trading at Rs 1,135 apiece, as seen at 12.48 pm. The stock is currently 14 percent higher than its 52-week low level of Rs 979.50, which it had hit in March this year. It is down more than 18 percent from its 52-week high of Rs 1,366.60, which it had hit in October last year.

The stock, which has a P/E ratio of nearly 64, has fallen nearly 8 percent in the past one month, and more than 5 percent in the past six months. It dropped 13 percent in the past year, and gained around 58 percent in the past five years.

Elara Capital says monsoon, GST transition to cloud Q2 sales:

Speaking about Q2 expectations, Elara Capital in its latest note said FMCG demand remained steady in Q2, but GST transition and an extended monsoon led to a temporary slowdown. It added that it expects a few companies to benefit from pricing-led growth, while others may face pressure due to sustained intensity in competition. “Higher input costs are likely to weigh down margins, with most companies likely to report a contraction in profitability. Our preferred picks within our FMCG coverage universe are Marico, Tata Consumer and Titan,” it said.

Elara explained how extended monsoon and GST shift can weigh down on short-term demand. "FMCG demand remained subdued sequentially in Q2FY26. Extended monsoons dampened household insecticide and beverages sales, as nearly 91% of sub-regions received normal to excess rainfall. In beverages, competitive intensity remains high, with incumbents resorting to promotions and discounts to protect share. The growth in rural India continued to be ahead of Urban. The recent rationalization in GST rate is set to boost consumer demand with most food and personal care categories taxed at 5% versus 12-18% earlier. However, companies have called out transitory impact on volumes in the near term, as trade channels focus on liquidating pre-GST inventory, leading to a temporary slowdown in secondary sales immediately after the announcement," it said.

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