Personal care business aids Godrej Consumer revenue but Street stares at shrinking volume

Its revenue increased eight percent on year to Rs 3,125 crore for the three-month period, according to a regulatory filing. Analysts in a CNBC-TV18 poll had estimated the FMCG company's net profit at Rs 365 crore and revenue at Rs 3,125 crore.

The company reported strong momentum in personal care but staged a soft performance in home care.

Revenue from the home care business fell four percent to Rs 663 crore, and that from the unbranded and exports unit declined six percent to Rs 63 crore, according to a statement.

Revenue from personal care, however, jumped 25 percent to Rs 1,088 crore, Godrej Consumer said.

Godrej Consumer Products' EBITDA margin — a key measure of operating profitability — came down to 16.7 percent in the quarter ended June, from 20.7 percent in the corresponding period a year ago.

Analysts had estimated the margin at 17.1 percent.

The company expects a recovery in consumption as well as its gross margin. Its management said the steady performance was driven by pricing.

"We continue to believe that with the relatively non-discretionary, mass pricing of our portfolio and very good performance on market shares, volume growth will return in the medium term," said Sudhir Sitapati, CEO, Godrej Consumer Products.

He said the fall in EBITDA was on account of unprecedented global commodity inflation, upfront marketing investments and a weak performance in the company's Indonesia, Latin America and SAARC businesses.

The company's domestic branded volume — comprising home care and personal care businesses — fell five percent, in line with analysts' estimate of 4-5 percent.