Godrej Consumer Products Q4 Results: Profit Beats Estimates, Margin Expands

Godrej Consumer Products Ltd.'s fourth-quarter profit rose, beating analyst estimates, driven by a recovery in volume and margin expansion.

Consolidated net profit of the maker of Good Knight mosquito repellent and Cinthol soaps rose 24% over the year earlier to Rs 452.14 crore in the quarter ended March, according to its exchange filing. That compares with the Rs 430 crore consensus forecast of analysts tracked by Bloomberg.

Revenue for the company rose 10% to Rs 3,200.16 crore, against the Rs 3,249.47 crore estimate. That's the highest sales growth in the last five quarters. Volume rose 6% during the quarter, the company said.

Godrej Consumer Q4 FY23 Highlights (YoY)

• Operating profit jumped 32% to Rs 664.81 crore, against an estimate of Rs 617.84 crore.

• Margin expanded to 20.8% from 17.2% due to the easing of input inflation. Analysts had forecast it at 19%.

• Revenue from India business rose 11.5% to Rs 1,822.92 crore; volumes rose 11%.

• Indonesia posted a 5% rise in revenue in constant currency; excluding hygiene, this business grew 11%.

• Africa, the U.S. and the Middle East grew 8%. The business was impacted by election and demonetisation in Nigeria.

• Latin America and SAARC registered 64% growth

Segment-wise, the company has reported a 14% increase in sales growth of home care business to Rs 826 crore, while its personal care segment grew 17% to Rs 872 crore in the fourth quarter, according to an investors presentation.

"We had a strong end to the year with volume-led double-digit sales growth in Q4," Chief Executive Officer Sudhir Sitapati said in a statement. "Our quality of profits has also been improving with consolidated gross margin expansion of 180 basis points quarter-on-quarter and 340 basis points year-on-year."

The management of the company expects to build on the current momentum and deliver volume-led growth along with upfront marketing investments and improvement in profitability.

During the quarter, media investments saw a growth of 20% year-on-year. The company launched an access pack of Godrej Selfie shampoo hair colour at Rs 15, predominantly in the southern market.

During the March quarter, the fast-moving consumer goods sector witnessed a gradual recovery in growth rate, driven by improving consumption trends and easing inflationary pressure on margins.

Peers like Hindustan Unilever Ltd. reported a rise in net profit and revenue, while volume and margin missed consensus estimates.

Nestle India Ltd., Britannia Industries Ltd., and Tata Consumer Products Ltd. registered an exceptional quarter, with earnings beating estimates on all fronts. Nestle's margins, however, remained under pressure because of higher costs of key inputs—fresh milk, fuel and green coffee.

Dabur India Ltd., continued to see pressure on volume as inflation continued to impact demand, especially in the rural segment where consumers are still downtrading.

Marico Ltd. has seen margin expansion during the quarter, led by softening prices of key inputs like copra. It is also seeing pricing growth taper off due to price cuts taken in Parachute coconut oil and Saffola edible oil during the year, in response to falling input prices.

Shares of Godrej Consumer closed 0.85% higher before the results were announced, as against a 0.27% gain in the benchmark NSE Nifty 50.