Despite Q2 Profit Decline, Godrej Consumer Shares Rise 6% on H2FY26 Growth Hopes

Godrej Consumer Shares Jump 6% Despite Q2 Profit Decline; Analysts See Strong H2FY26 Outlook

Mumbai, November 3, 2025: Shares of Godrej Consumer Products Ltd (GCPL) surged nearly 6% on Monday despite the company posting a decline in its Q2 FY26 net profit, as brokerages turned optimistic about a stronger performance in the second half of the fiscal year. Analysts expect improving demand, easing input costs, and GST-related recovery to drive earnings momentum going forward.

The stock was trading at ₹1,184.80 per share in morning trade, extending gains even after a muted quarterly performance. Investor sentiment remained buoyant following multiple ‘Buy’ calls from leading brokerages, with target prices suggesting an upside of 25–30% from current levels.

Godrej Consumer Q2 Results: Profit Dips, Revenue Rises

In its latest quarterly report, Godrej Consumer Products announced a consolidated net profit of ₹459 crore for the quarter ended September 2025, marking a 6.5% year-on-year decline compared to ₹491 crore reported in the same quarter last year.

Despite the fall in profit, revenue from operations increased 4% YoY to ₹3,825 crore, driven by steady demand across its domestic and international businesses. The company also declared an interim dividend of ₹5 per share for FY26, with November 7 set as the record date and payment scheduled on or before November 30.

Management attributed the muted profit growth to the impact of GST rate cuts and adverse weather conditions, which affected sales momentum in the first half of FY26. However, the company maintained that it expects stronger operational performance in the coming quarters as macro conditions stabilize.

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Jefferies: Weak Q2, But Strong Volume Growth Ahead

Global brokerage Jefferies reiterated its ‘Buy’ rating on Godrej Consumer with a target price of ₹1,400 per share, implying a 25% upside from the stock’s last close.

The brokerage acknowledged that the company reported a weaker-than-expected Q2 performance due to GST-related pressures in India and weather-related disruptions, but noted that volume growth was 3% ahead of its internal estimates — a positive indicator of underlying demand resilience.

“While near-term margins were impacted, we expect gradual recovery in the second half as the effects of GST adjustments fade and input cost trends turn favorable,” Jefferies noted in its post-result analysis.

HSBC: EBITDA Margins to Recover in H2

HSBC Securities also maintained a ‘Buy’ rating on the stock with a target price of ₹1,440, suggesting nearly 29% upside potential. The brokerage highlighted that despite a soft Q2, the company’s EBITDA margins are likely to improve meaningfully in H2 FY26 as palm oil prices stabilize and operational efficiency strengthens.

“The GST rate cuts created short-term pressure on profitability, but this should normalize in the coming quarters. We continue to see a healthy growth outlook led by improving domestic demand and product diversification,” HSBC said in its research note.

Motilal Oswal: Margin Tailwinds to Support Profitability

Domestic brokerage Motilal Oswal Financial Services echoed similar optimism, retaining its ‘Buy’ recommendation with a target price of ₹1,400 per share. It said the Indian business is showing signs of steady recovery and that the easing of input costs, particularly palm oil, will act as a key margin tailwind in the second half.

“The combination of accelerating volume growth and expanding margins bodes well for overall profitability. We expect 10% revenue CAGR and 12% EBITDA CAGR for FY25–28,” Motilal Oswal stated.

The brokerage also pointed out that Godrej Consumer’s expansion into new, high-growth categories and its strategy to strengthen its core product portfolio will enhance long-term earnings visibility.

Other Brokerages Remain Positive on Outlook

PhillipCapital noted that H2FY26 should bring a strong rebound in volumes and margins, supported by recovery in the soap and personal care segments. It expects improved operating leverage as raw material costs stabilize.

Emkay Global Financial Services added that execution improvements and category expansion will start reflecting in the company’s numbers once macro volatility eases.

Meanwhile, Centrum Broking said early signs of positive tailwinds are visible. It estimated that the GST transition had a 400-basis-point negative impact on reported growth, implying that underlying performance remained strong on a normalized basis. Centrum added that with palm oil prices cooling off, profitability recovery looks sustainable.

Interim Dividend, Healthy Balance Sheet Add Confidence

The interim dividend announcement of ₹5 per share further underlines management’s confidence in the company’s financial strength. Godrej Consumer continues to maintain a healthy balance sheet, enabling it to invest in innovation, distribution expansion, and category leadership initiatives.

Market experts say the company’s strong cash position and prudent cost management practices offer ample room for shareholder value creation in the medium term.

Outlook: H2FY26 to Drive Growth Revival

Analysts broadly agree that Godrej Consumer Products is poised for a rebound in H2FY26, supported by easing input costs, improving consumer sentiment, and normalization post-GST rate adjustments.

The company’s focus on expanding its total addressable market (TAM) and strengthening its core categories positions it well to capitalize on the next leg of growth.

While short-term headwinds impacted Q2 performance, brokerages believe Godrej Consumer remains structurally strong, with a clear roadmap for volume-led growth, margin expansion, and long-term value creation.

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