Godrej Consumer Products tumbles 7% to 52-week low as material cost overhang looms over Q2 earnings; what's next?

Godrej Consumer Products shares tumbled more than 7% to their 52-week low during the trading session on Friday, October 30, as investors focused on the raw material cost overhang, which impacted the overall margins of the fast-moving consumer goods (FMCG) company in the July to September quarter of FY27.

NSE data showed that Godrej Consumer Products (GCPL) shares declined 7.1% to hit an intraday and 52-week low of ₹777.20 apiece on Friday’s market, in comparison to ₹837 apiece at the previous equity market close.

Despite a year-on-year (YoY) rise in the consolidated net profits and healthy revenue gains in Q2 earnings, Godrej Consumer Products’ elevated raw material cost added downward pressure on the company’s operating and EBITDA margins.

The latest updates also showed that Godrej Consumer Products’ management maintained its FY27 guidance, anticipating double-digit revenue and EBITDA growth at the consolidated level.

Market experts predict that although the company is on its way to meet its FY27 guidance, inflation headwinds in the economy are expected to maintain the raw material cost overhang in the upcoming period.

What do analysts predict next?

Analysts from the global investment firm HSBC said that the overall consolidated volumes in the Indian market remained stable for GCPL in the 7-8% range, while the company’s Africa business was the top-performing segment.

“GCPL is on course to meet FY27 guidance, but rising inflation is still a headwind, especially for India margins,” said HSBC analysts.

The experts also cited that the raw material cost overhang is clouding the outlook for the company even though the FMCG company’s management retained its FY27 guidance.

In line with the review, CLSA experts also said that the raw material inflation led to a 500 basis points standalone gross margin contraction year-on-year, despite a pricing growth of 6% in the period.

“Consolidated EBITDA was in line with CLSA estimates, but 2% below consensus,” said the analysts.

The experts also noted that GCPL’s management has highlighted an aggressive pricing increase in the soaps and detergents product category as both businesses retain normal margins.

How were the Q2 results?

Godrej Consumer Products posted a 14% surge in its consolidated net profits (attributable to owners) to ₹523 crore in the second quarter of FY27, in comparison to ₹459 crore in the corresponding quarter of the previous fiscal year.

The FMCG company’s total revenue from core operations (including sale of products) advanced 19% to ₹4,413 crore in the September quarter, compared with ₹3,708 crore in the same quarter of the previous year, as per the NSE filing.

Despite the operating profit or EBITDA (excluding other income) rising nearly 12% to ₹820 crore in the July to September quarter, the margins came under pressure due to the cost of raw materials in the period.

Data showed that the company’s raw materials cost increased to ₹1,654 crore in Q2 FY27, from ₹1,524 crore in Q2 FY26, marking an 8.5% yearly increase in the period.

EBITDA margins contracted 119 basis points to 18.58%, in comparison to 19.77% in the same period a year earlier, as per the exchange filings. While the operating margins declined 120 basis points to 18.7% levels in Q2 FY27, from earlier 19.9% levels a year ago.

“We continue to hold our FY27 guidance: high-single-digit underlying volume growth in Standalone, and double-digit revenue and EBITDA growth at the consolidated level. With revenue running ahead of plan through the first half, we remain on track to deliver, with the confidence to exceed it in select areas,” the GCPL said in a statement.

The company also declared a ₹5 per share interim dividend issue for all eligible shareholders up to 24 hours ahead of the pre-determined official record date of the corporate action, i.e., Wednesday, November 4, 2026.

The dividend will be paid to all eligible shareholders on or before Friday, November 27.