Godrej Consumer records low volume growth in Q3; expects margin dilution

Godrej Consumer Products said it expects to deliver close to high single-digit sales growth in India in the quarter ended December 2021, largely driven by prices.

Recently, the company's MD & CEO, Sudhir Sitapati had highlighted the unprecedented cost inflation witnessed during the quarter. This has resulted in low volume growth and high price growth coupled with high gross margin dilution and EBITDA margin dilution.

The company witnessed broad-based sales growth in its Home Care and Personal Care categories during the period under review.

In Indonesia, GCPL expects a marginal decline in constant currency sales growth. The company continued to put building blocks in place to drive category development and general trade distribution expansion, to ensure gradual recovery in the short term.

In Godrej Africa, USA and Middle East, growth momentum continued across most of the company's key countries of operations. It expects to deliver constant currency sales growth in the teens.

At a consolidated level, the company expects to deliver close to high single-digit sales growth.

On the profitability front, the company expects quality of profits to improve with sequentially expanding gross margins, however, lower on a year-over-year basis due to unprecedented cost inflation.

In line with the company's strategy of driving category development, it had sequentially higher marketing spends. The net result would be a dilution in operating margins during the quarter, on a year-over-year basis.

Godrej Consumer Products is an Indian consumer goods company. The company's products include soap, hair colourants, toiletries and liquid detergents.

The company reported 4.6% rise in consolidated net profit to Rs 478.89 crore on a 8.5% increase in revenue from operations to Rs 3,163.65 crore in Q2 FY22 over Q2 FY21.

The scrip rose 0.61% to currently trade at Rs 957.96 on the BSE.

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