GODREJCP

: India Revival Supports Growth, Valuations Reflect Optimism

(GCPL) has indicated a gradual recovery in consumption over the next few quarters, with demand improving in Q3FY26. Easing inflation and better affordability following GST rationalization are expected to aid revival. Consolidated revenue is projected to grow in double digits, led by strong India volumes, while margins are returning to normalized levels. Revenue and Margin Outlook - Q3 consolidated revenue expected to grow in double digits. - India business volume growth also in double digits. - EBITDA margin for India business guided at 24–26%, supported by lower input costs, calibrated pricing, and operating leverage. - Nomura estimates 12.8% EBITDA growth YoY, above its earlier forecast of 9.5%. Segmental Performance – India - Home-care (27% of FY25 sales): Double-digit value growth despite weak winter impacting insecticides. - Personal care (32% of FY25 sales): Mid-single-digit growth, led by soaps recovery after nearly 10 quarters of stagnation. - Ex-soaps volumes already growing in double digits, highlighting healthier underlying demand. - India volumes improved from 4% growth in H1FY26 to stronger momentum in Q3. International Business Trends - Overseas operations contributed 39% of FY25 sales. - Indonesia (14% of sales): Early stabilization but expected to decline ~3% YoY in Q3 amid pricing pressure; recovery seen only from FY27. - GAUM (Africa, US, Middle East): Continues to deliver double-digit growth across key parameters. Stock Performance and Valuation - GCPL stock up 8% in past year. - At ~48x FY27 earnings, valuations already price in optimism. - Sustained Q3 performance could support high single-digit consolidated revenue growth in FY26. Outlook - Domestic demand recovery and margin normalization provide near-term comfort. - International business remains uneven, but GAUM offsets Indonesia weakness. - Valuation premium reflects confidence in sustained growth, though execution will be closely watched.