Godrej Consumer Q1 Update: Demand Steady; Estimates Double-Digit Sales Growth

Godrej Consumer Products Ltd. estimated on Wednesday that its consolidated sales grew in the double digits in the June quarter, driven primarily by consistent demand for its home care and personal care products.

The domestic business unit of the maker of Goodknight mosquito repellant and Cinthol soaps recorded double-digit volume growth in the three months that ended June 30, according to its quarterly business update filed with the bourses. Sales growth was marginally higher than mid-single digits as the company passed on the benefits of lower input costs to consumers.

"In India, overall consumer demand remained steady, as seen in the previous few quarters," the company said in a statement.

As for the international business, Godrej Consumer said its Indonesia business delivered "steady performance" on the back of structural changes implemented last year. Sales growth is expected to grow in the mid-teens in constant currency terms. Godrej Africa, the U.S., and Middle East also continued to deliver "consistent" performance with constant currency sales growth in the mid-teens. However, in rupee terms, there was an adverse currency translation impact, resulting in high-single-digit sales growth.

The company estimated that its overall volumes, including in overseas markets, rose in the high-single-digit percentage range.

"Our quality of profits has seen sustained improvement, led by robust gross margin expansion and ongoing category development investments," it said. This, the company said, should translate to strong Ebitda growth.

The company expects an exceptional loss due to stamp duty expenses on slump sale transactions at Park Avenue and the KamaSutra acquisition.

In the preceding quarter, Godrej Consumer recorded revenue growth of 10% at Rs 3,200 crore—the highest sales growth in the last five quarters. Volumes grew 6%.

Analysts at Dolat Capital peg the company's first-quarter revenue growth at 12%. It also estimates an Ebitda margin of 21%, higher year-on-year led by a gross margin recovery amid an easing of inflation.

Shares of Godrej Consumer are trading 2.33% higher as of 1:42 p.m., compared to a 0.07% decline in the NSE Nifty 50.