Emami Q2 profit drops 30% on GST disruption, rain impact on sales

FMCG major Emami posted a 30.2% YoY fall in Q2 profit to Rs 148.35 crore, hit by temporary trade disruption from GST rate changes and heavy rains affecting key product categories

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FMCG firm Emami on Monday reported a 30.2 per cent year-on-year (Y-o-Y) drop in net profit (attributable to owners) to Rs 148.35 crore for the July–September quarter of the current financial year (Q2FY26) due to temporary trade disruption in anticipation of a GST rate cut and excessive rains that impacted some product categories. Net profit in the year-ago period had stood at Rs 212.66 crore.

 

Consolidated revenue from operations in Q2FY26 fell 10.3 per cent to Rs 798.51 crore. Sequentially, revenue was down 11.7 per cent and net profit declined 9.7 per cent.

 

How did GST rate changes affect Emami’s business?

 

Describing the GST reform as “structurally positive,” Emami said nearly 88 per cent of its core domestic portfolio benefited from the reduction in GST from 12 per cent or 18 per cent to 5 per cent — taking its total 5 per cent GST-rate portfolio coverage in the core domestic business to around 93 per cent.

 

However, the implementation of the new rates caused temporary trade disruptions in September. “Trade channels and consumers deferred purchases in anticipation of lower MRPs, while distributors focused on liquidating higher-cost inventory, resulting in a short-term moderation in sales,” the company said.

 

The timing of the GST rate change also coincided with the peak winter pipeline build-up, leading to deferment in the company’s winter portfolio loading. Excessive rains further affected offtake in talc and prickly heat categories on a high comparative base.

 

Which segments performed better despite the disruption?

 

Excluding GST-impacted categories, the non-impacted portfolio grew by 10 per cent during the quarter. The company’s international business delivered 8 per cent growth.

 

Commenting on the results, Harsha V Agarwal, vice-chairman and managing director, Emami Ltd, said the quarter’s performance reflected a temporary impact from trade disruptions linked to the pending GST revision and weak summer demand.

 

“With improving market sentiment and a favourable season ahead, we remain confident of strong growth in the coming quarters. Our bottom line remains stable, with costs well managed despite global supply chain challenges due to geopolitical issues,” Agarwal added.

 

What is Emami’s outlook for the rest of the fiscal year?

 

Mohan Goenka, vice-chairman and whole-time director, Emami, said October marked a clear turning point, with trade sentiment rebounding and deferred winter loading recovering, putting the company on a solid footing for the second half of the year.

 

Goenka also said the non-GST-impacted portfolio delivered 10 per cent growth in Q2, signifying that consumer demand remained intact.