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Godrej Consumer Products Ltd. has provided an update for Q3 FY25, indicating subdued demand conditions in India, affecting overall FMCG market growth. Despite these challenges, the company has maintained an average organic Underlying Volume Growth (UVG) of approximately 7% over the past six quarters due to category development and media investments. However, the rise in palm oil prices has pressured the soaps category, which constitutes about one-third of standalone business revenue. To mitigate cost increases, the company has raised prices and reduced product sizes, which may lead to a temporary inventory reduction. Adverse weather conditions have also impacted the Home Insecticides segment, further complicating growth dynamics.
While part of the portfolio shows strong performance with expected double-digit UVG, the overall standalone business anticipates flattish UVG and mid-single digit sales growth this quarter. Historically, margins have ranged between 24-27%, but inflation and external pressures may lead to a breach of this norm. The international segment, particularly in Indonesia, remains robust with expected mid-single digit volume growth, while the GAUM region is experiencing a decline in trade stocks. Management believes current challenges are temporary and is focused on long-term growth strategies amidst these headwinds.