Godrej Consumer releases in-line Q2FY26 update; should you buy or sell?

Godrej Consumer Product's standalone business is expected to deliver mid-single digit value growth, supported by low-single digit underlying volume growth (UVG)

Godrej Consumer Products (GCPL) released its September quarter (Q2FY26) business update on Tuesday, October 7, 2025, after market hours. In its quarterly update, the company said that the government’s recent goods and services tax (GST) reforms represent an encouraging step towards strengthening consumer demand. 

 

At 9:16 AM, Godrej Consumer Products' share price was trading 0.97 per cent lower at ₹1,141.25 per share. In comparison, BSE Sensex was up 0.19 per cent at 82,080.73

Godrej Consumer Products Q2 update

With the revised rates, nearly one-third of GCPL’s portfolio—primarily toilet soaps as well as smaller categories like talcum powders, shampoos, and shaving creams—now benefits from a reduced GST of 5 per cent, down from the earlier 18 per cent. 

 

 

However, the GST rate reductions have resulted in some short-term adjustments across trade channels, as distributors and retailers focused on liquidating existing inventories. This has delayed the flow of new orders and temporarily deferred consumer purchases, impacting both growth and profitability, the company said. 

 

Consequently, GCPL’s standalone business is expected to deliver mid-single digit value growth, supported by low-single digit underlying volume growth (UVG). 

 

Home Care portfolio has continued to demonstrate strong momentum and is likely to result in high-single digit value growth, according to the company’s filing. Personal care is likely to decline in the low single digits, largely influenced by the soaps category. 

 

“We believe this is a transitory adjustment and remain confident in the long-term benefits of the reforms,” the company said. 

 

In its international portfolio, 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, albeit with slightly positive UVG. 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.

 

At a consolidated level, the company anticipates mid-single-digit INR revenue growth. However, the GST transition in India is expected to have a short-term impact on profitability, with Earnings before interest, tax, depreciation and amortisation (Ebitda) likely to decline for the quarter. Despite this temporary adjustment, the company remains confident of our plans and is positive about the likely performance in the second half of the financial year.

Should you buy, sell or hold GCPL shares?

GCPL’s Q2 business update was in line with analysts' expectations. 

 

Nomura maintained a ‘Buy’ with a target of ₹1,500 per share, implying an upside of 30 per cent from current levels. 

 

The brokerage expects GCPL to report weak margins, pressured by high competitive intensity in the Indonesian business, higher brand investments in Africa, and continued pressure of higher-priced palm oil due to delayed pricing in soaps. This will lead to a mid- to high-single-digit year-on-year (Y-o-Y) decline in consolidated Ebita.

 

Additionally, the company will start seeing the benefits of lower-priced palm prices from Q3FY26F, according to Nomura. 

 

Nuvama Institutional Equities also maintained ‘Buy’ with a target of ₹1,450, which implies an upside of 25.8 per cent from current levels. 

 

The brokerage estimates consolidated revenue to grow 6 per cent Y-o-Y in Q2FY26, as compared to 10 per cent in Q1FY26 and 1.8 per cent in Q2FY25. 

 

Consolidated volumes are anticipated to grow 4 per cent Y-o-Y, against 8 per cent in Q1FY26, 5 per cent in Q2FY25. Consolidated Ebitda shall decline 3 per cent Y-o-Y, as compared to 5 per cent decline in Q1FY26. Gross margin shall contract 350 basis points (bps) Y-o-Y to 52.1 per cent. Ebitda margin could fall 180 bps Y-o-Y to 19 per cent.