Godrej Consumer Shares Hit 6-Month Low After Q2 Profit Warning on GST Transition
The shares of Godrej Consumer Products Limited (GCPL) plummeted nearly 3% to their six-month low of Rs. 1,120 apiece on Wednesday, 8 October 2025 (Moneycontrol). This comes after the FMCG (Fast-Moving Consumer Goods) giant released its business update for the second quarter of the financial year 2025-26. The company stated that the recent GST (Goods and Services Tax) rate cuts may impact its Q2 profits due to a temporary slowdown.
In a post-market exchange filing released on 7 October 2025, GCPL attributed the weakness in its shares to “short-term adjustments” across trade channels as distributors and retailers scrambled to clear their existing inventories following the government’s GST rate cut announcements. This has not only delayed new orders but also temporarily dampened consumer purchasing, impacting both revenue growth and profit margins. However, the company is confident of its performance in the second half of the financial year.
"Consequently, our Standalone business is expected to deliver mid-single digit value growth, supported by low-single digit UVG. Within our categories, Home Care portfolio continues to demonstrate strong momentum, likely to result in high-single digit value growth, while Personal care is likely to decline low-single digit, largely influenced by the soaps category. We believe this is a transitory adjustment and remain confident in the long-term benefits of the reforms," GCPL mentioned in its release (Moneycontrol).
"Despite this temporary adjustment, we remain confident of our plans and are positive of the likely performance in the second half of the financial year," the FMCG company further added.
Godrej Consumer Products Limited - Business Overview
GCPL is one of the leading FMCG companies in India. The company’s product portfolio comprises household and personal care products, including soaps, face wash, body wash, hand wash, mosquito repellants, hair colour, air freshener, and baby care products, among others. These products are marketed and sold across 90 countries across the globe, with a prime focus on emerging markets such as Asia, Africa, and Latin America (Godrej Official Website).
As of March 2025, the company’s total revenue stood at Rs. 14,364.29 crores, with a net profit of Rs. 1,852.30 crores (Livemint). As of 9 October 2025 (11 AM), GCPL shares were trading for Rs. 1,132.25, after gaining nearly 0.21% from their last closing price. The stock price has declined by more than 8% in the past one month. Even the one-year return stands at 13.54% in the red.
What’s Driving the Decline?
Here are a few factors that have contributed to the decline of the GCPL share prices:
- GST rate cuts trigger temporary slowdown
From 22 September 2025, a major chunk of GCPL’s product portfolio - including soaps, shampoos, talcum powders, and shaving creams - became subject to the lower GST slab of 5%. These products were previously taxed at 12% or 18% (The Economic Times).
As the company mentioned in its exchange filing released on 7 October 2025, these GST rate cuts forced retailers to liquidate their existing inventories while waiting to restock with lower GST rates. This created a lag in fresh orders, leading to a temporary slowdown.
- Mixed international performance
Talking about its international performance, GCPL mentioned that its Indonesian business continued to face competitive pricing pressures across key categories, leading to a low-single-digit decline in value growth. However, the Godrej Africa, USA, and Middle East (GAUM) division is expected to deliver robust double-digit growth in both value and volume.
- Sectoral decline
Besides GCPL, the FMCG sector, on the whole, witnessed a decline since the GST rate cut announcements. Hindustan Unilever shares have fallen 4.5% in the past one month. Dabur India shares have declined by more than 11% during the same time frame.
What Does This Mean for Investors?
The sharp short-term slide in GCPL shares has highlighted investor concerns over short-term profit erosion. With the P/E ratio hovering near 64, the stock had already been under pressure since achieving a new peak in September last year. Although the stock showed some resilience in March and April this year, it failed to sustain the momentum.
The analysts warn swing and intraday traders to proceed with caution. Rs. 1,160 could be a key support level, and a breakdown could invite further downside.
Having said that, the company maintains confidence in the long-term structural impulse from the GST reforms, anticipating that lower taxes will stimulate volume in subsequent quarters. The company also expects performance to improve in the second half of the financial year with trade distortions easing and consumer demand stabilising.
Conclusion
GCPL’s share price fell to a six-month low, underscoring a broader caution among investors around the short-term impact of the GST transition. While revenue growth may continue, the profit margin for Q2 is threatened. The key question now is whether this is a temporary setback as perceived by the company or a signal that competitive intensity and cost pressures are deeper than assumed. No matter what it turns out to be, investors must proceed with caution.
Sources:
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