Godrej Consumer Products Ltd - Quarterly Update: 2QFY23

Godrej Consumer Products Ltd has provided an update with overall summary of the operating performance and demand trends during the quarter ended September 30, 2022. This will be followed by a detailed performance update, post the approval of the 2QFY23 financial results by the Board of Directors.

The Indian FMCG industry continued to remain soft during the quarter. Rural markets witnessed slower growth compared to urban. However, with the moderation in inflationary pressures due to correction in commodity prices, and the monsoon largely being on track (apart for a few states), we expect consumption to improve in the second half of the year. We continue to remain competitive given the relatively non-discretionary mass pricing of our portfolio.

In India, we expect to deliver high single-digit sales growth. Our 3-year CAGR remains robust and close to double-digits. We expect a mid-single-digit volume drop, with a low single-digit 3-year volume CAGR. Personal Care sustained its strong double-digit growth trajectory, while Home Care witnessed close to mid single-digit growth.

In Indonesia, with Hygiene performance waning after COVID-19 and a large Hygiene comparator in the base, we expect early double-digit constant currency sales decline. We expect close to high single-digit sales growth (excluding Hygiene).

In Godrej Africa, USA, and Middle East(GAUM), we continued our growth momentum across key countries. We expect to deliver constant currency sales growth in the low-teens. We are expecting constant currency sales growth in upwards of thirties in our Latin America business.

At a consolidated level, we continue to leverage our category and geographic portfolio. We expectto deliver higher than mid single-digit sales growth with a close to double-digit 3-year CAGR. We expect close to double digit sales growth ex Indonesia's Hygiene comparator.

On the profitability front, we expect a mid-teen decline in EBITDA. This is due to consumption of high cost materials, significant upfront marketing investments to drive category development, and a weak performance in Indonesia. However, with significant correction in commodities like palm oil derivatives and crude oil, we expect recovery in consumption, gross margins expansion and upfront marketing investments in the upcoming quarters.

Source : Equity Bulls

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GodrejConsumerProducts GCPL BusinessUpdate QuarterlyUpdate Q2FY23