Godrej Consumer shares plunge 7% to four-year low despite strong Q2-profit; what brokerages say

It eventually pared some losses to settle 2.27 percent lower at Rs 818.10. The stock was the top loser on the Nifty FMCG index, which closed 0.53 percent lower at close. Godrej Consumer Products shares have fallen nearly 5 percent so far in October and 26.80 percent over the past one year. The stock is down 34.46 percent on year-to-date basis. The selloff came despite the fast-moving consumer goods (FMCG) major reporting the highest on-year rise in its net profit in the last six quarters for the September quarter, in which its bottom line declined for two quarters.

It reported a 13.84 percent year-on-year increase in its consolidated net profit to Rs 522.92 crore for the September quarter of FY27, driven by volume growth. It had posted a net profit of Rs 459.34 crore in the July-September quarter a year ago. However, rising input costs and concerns over the sustainability of margin recovery have tempered investor sentiment. The absence of a new chief executive officer for the company's India business remains another overhang.

Total revenue from operations rose 19 percent to Rs 4,413.09 crore in Q2 FY27, against Rs 3,708.19 crore in the corresponding period of the preceding fiscal. In Q2 FY27, consolidated sales grew by 19 percent YoY on the back of underlying volume growth of 8 per cent, the company said in its earnings statement. The FMCG major reported a 12 percent YoY growth in EBITDA (earnings before interest, taxes, depreciation, and amortisation).

Total expenses of GCPL stood at Rs 3,758.26 crore, up 20.6 per cent YoY, in the second quarter of FY27. Brokerages on GPCL share: HSBC retains Hold; CLSA remains cautious Brokerages offered a mixed outlook on GCPL after the earnings announcement, with concerns over inflation and margins offset by confidence in its volume growth and full-year guidance. HSBC on GPCL share: Hold, Target price Rs 960 Brokerage firm HSBC has maintained a ‘Hold’ rating on the stock with a target price of Rs 960.

The brokerage noted that India and consolidated volume growth remained stable at 7 percent and 8 percent, respectively, while EBITDA growth came in at 12 percent YoY. Africa emerging as the company’s top-performing region. HSBC believes GPCL is on course to meet FY27 guidance, but rising inflation continues to pose a headwind, especially for India margins. The brokerage made modest EPS revisions but retained ‘Hold’ as management change and raw material overhang cloud outlook.

CLSA on GCPL share: Underperforms, Target price Rs 747 CLSA, meanwhile, maintained its ‘Underperform’ rating with a target price of Rs 747. The brokerage noted that consolidated sales growth was at 19% YoY, or 15% in constant currency terms. However, raw material inflation led to a 500-bps standalone gross margin contraction YoY, despite pricing growth of 6%. Consolidated EBITDA was in line with CLSA's estimates but 2% below consensus expectations.

The brokerage also said that GCPL highlighted further aggressive pricing increase in the soaps and detergents portfolio as both businesses retain normal margins. GPCL has maintained guidance of double-digit consolidated revenue and Ebitda growth in FY27. Emkay on GPCL share: Buy, Target price Rs 1,250 Emkay Global Financial Services reduced its target price on GCPL by 12 percent to Rs 1,100 from Rs 1,250, while maintaining its ‘Buy’ recommendation.

The brokerage expects the company's revenues to grow 12 percent at a compounded annual rate. The company's guidance for "double-digit" sales and earnings before interest, tax, depreciation, and amortisation for 2026-27 (Apr-Mar) is achievable, Emkay Global said. Looking forward, the company's management expects to maintain its consolidated double-digit growth in revenue and earnings before interest, tax, depreciation, and amortisation in the second half of the current financial year, through cost savings, price hikes and investing in brands.

The company's management expects detergent growth to remain strong, due to formalisation and migration from powders to liquids. While soaps continue to face pricing issues due to severe raw material inflation. This could be offset by growth in other segments, it said. Equirus Securities: Long, Target price Rs 1,087 with 30% upside Equirus Securities maintained a ‘Long’ rating on GCPL with a target price of Rs 1,087, implying an upside potential of around 30 percent.

Motilal Oswal on GPCL share: Buy, Target price Rs 1,050 with 25% upside Motilal Oswal Financial Services retained its ‘Buy’ outlook on GCPL with a target price of Rs 1,050, implying an upside potential of around 25 percent. The brokerage maintained its earnings-per-share estimates for FY27-FY29 and expects the company to deliver high-single-digit underlying volume growth (UVG) in India alongside double-digit consolidated revenue and EBITDA growth in FY27.

It expects GAUM continue to deliver strong growth and profitability, while Indonesia’s momentum to remain healthy. “Elevated commodity inflation is likely to keep near-term margins under pressure. However, calibrated pricing and cost-saving initiatives should support absolute EBITDA growth, with margin recovery hinging on pricing realization and input-cost trends,” it said. It expects revenue and EBITDA to grow at compound annual growth rates of 14% and 13%, respectively, over FY26-FY29.