Margin Squeeze at Home, Growth Groove Abroad—Godrej Consumer’s Q2 Saga

Updated: October 07, 2025 20:59

Image Source: Business Standard

Godrej Consumer Products expects a dip in Q2 EBITDA, citing a temporary blow to profits from ongoing GST transition. Despite the short-term pressure, the company forecasts mid-single-digit consolidated revenue growth and robust double-digit expansion in its GAUM (Godrej Africa, USA, and Middle East) segment, highlighting resilience in key international markets.

Godrej Consumer Products Ltd (GCPL) has cautioned investors about a softer Q2 result, highlighting a likely decline in EBITDA as a direct consequence of shifting GST (Goods and Services Tax) regimes. The consumer goods major underscored the short-term bruising from this transition, noting it would weigh notably on profitability for the September quarter. However, GCPL signaled optimism about underlying business strength, citing resilient growth across its international footprint—particularly in the GAUM (Godrej Africa, USA, and Middle East) segment.

While GST-related reforms are expected to narrow the company’s profit margins this quarter, management remains upbeat about demand momentum. GCPL projects a mid-single-digit increase in consolidated revenue year-on-year and anticipates its international GAUM business to post robust double-digit value and volume growth in Q2. This signals clear regional pockets of strength despite domestic challenges.

Need-to-Know Developments

EBITDA Pressures: Godrej Consumer foresees its Q2 EBITDA declining, primarily due to the impact of GST transition expenses, reflecting elevated input and compliance costs.
Short-Term Profitability Strain: The company acknowledged that profitability will be under pressure in Q2, but views the headwinds as transitory, tied squarely to regulatory adjustments.
GAUM Powers Ahead: The Africa, USA, and Middle East business remains a silver lining, set to deliver double-digit growth in both value and volume, driven by resilient demand and successful market strategies.
Consolidated Revenue Picture: At the group level, the company expects mid-single-digit growth in INR revenue, underscoring overall stability despite transient margin compression.

Key Takeaways

GST transition is temporarily impacting Indian operations, but management expects the effect to be short-lived.
The international business, especially GAUM, is outperforming, bolstering overall group growth amid domestic headwinds.
Though profitability is pressured for Q2, Godrej Consumer maintains a positive medium-term outlook, banking on regulatory normalization and sustained global momentum.

Sources: BSE Filings, Company Announcements, Reuters

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