GCPL warns GST changes may impact Q2 profitability, EBITDA expected to fall

The GST rate reductions have resulted in some short-term adjustments across trade channels, as distributors and retailers focused on liquidating existing inventories, said GCPL in quarterly updates

Implementation of new GST slabs to lower the duty has resulted in some short-term adjustments across trade in the domestic market, Godrej Consumer Products Ltd (GCPL) said while projecting a 'low-single digit' volume growth on a standalone basis in the September quarter.

The GST rate reductions have resulted in some short-term adjustments across trade channels, as distributors and retailers focused on liquidating existing inventories, said Godrej Consumer in its quarterly updates.

This has delayed the flow of new orders and temporarily deferred consumer purchases, impacting both growth and profitability, the FMCG business of Godrje Industries Group added.

"Consequently, our Standalone business is expected to deliver mid-single digit value growth, supported by low-single digit UVG," it said.

However, GCPL, which markets brands as Cinthol, Godrej No1, Good Knight and HIT, said the government's recent GST reforms represent an 'encouraging step' towards strengthening consumer demand.

"With the revised rates, nearly one-third of GCPL's portfolioprimarily toilet soaps as well as smaller categories like talcum powders, shampoos, and shaving creamsnow benefits from a reduced GST of 5 per cent, down from the earlier 18 per cent," it said.

It has already passed on these benefits of GST effective September 22, 2025.

"We are confident that these reforms will serve as a structural growth driver, enabling volume-led expansion and reinforcing our long-term value creation agenda for all stakeholders," it said.

In the domestic market, GCPL's 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," it said.

Over its international portfolio, GCPL's second biggest market Indonesia continued to witness heightened competitive pricing activity across key categories, which is likely 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.

At a consolidated level, GCPL "anticipate mid-single digit INR revenue growth".

However, the GST transition in India is expected to have a short-term impact on profitability, with EBITDA likely to decline for the quarter.

"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," it said.