Godrej Consumer Products: New Launches, Expansion Plans, and Growth Outlook Amid Market Challenges || From Management’s conference call

New Product Launches

1. Household Insecticides – The company launched its new RNF (Reckoner Next Formula) across categories such as Incense Sticks, Liquid Vaporizers, and Coils. The product aims to be more effective, particularly in markets with unreliable electricity.
2. Laundry Liquids (Godrej Fab) – The company continues to expand in the growing liquid detergent category, competing with major players.
3. Air Fresheners & Sexual Wellness – These categories are seeing double-digit volume growth.
4. Superior Aerosol Formulation – The company is rolling out a new formulation for aerosols.

New Expansions

1. Rural Expansion via Van Operations – GCPL has heavily invested in rural van programs to enhance distribution. This has contributed significantly to rural growth.
2. Geographical Expansion in International Markets –
   • Indonesia continues to grow with volume growth of 6%, revenue growth of 9%, and EBITDA growth of 12%.
   • Latin America is seeing strong growth, with volume increasing by over 25%.
   • Africa is showing strong EBITDA improvement (15%), and revenue growth is expected to return in the coming quarters.
   • Nigeria & Argentina may see macroeconomic improvements in FY26.

Future Outlook

1. Revenue and Volume Growth Expected in Q4 FY25 – The company expects sequential improvements in Q4 as seasonal challenges and macroeconomic pressures stabilize.
2. Margin Recovery – The company is targeting a return to 24-26% EBITDA margins in India, driven by price hikes and cost efficiencies.
3. International Growth – Latin America and Indonesia are expected to continue positive momentum, while Africa is projected to return to revenue growth by Q4 FY25.

Growth Outlook

• Household Insecticides is gaining market share, particularly in Incense Sticks.
• Soaps and Body Wash – The company sees potential in body wash but acknowledges it is behind the curve compared to liquid detergents.
• Deodorants & Sexual Wellness – Mixed performance with market share gains in modern trade but challenges in general trade.
• Rural Growth is significantly ahead of urban growth, driven by the van program.

Challenges Faced

1. High Palm Oil Prices – Impacting margins, particularly in the soap category. Price increases are being implemented gradually.
2. Urban Consumption Slowdown – The company noted weak demand in urban markets, affecting premium product sales.
3. Inventory Destocking in Soaps – Due to sharp price increases and trade scheme reductions.
4. Weak Household Insecticides Season – The category has struggled due to seasonal variations.
5. Competitive Pressure in Body Wash & Liquid Detergents – The company is behind some competitors in these growing segments.
6. Challenges in Deodorants Distribution – Merging two distribution systems created issues, and the company is now working to fix them.
7. Regulatory Delays in Household Insecticides – Licensing for modern trade and e-commerce has slowed the full rollout of new products.