Q3FY22: Godrej Consumer expects single-digit sales growth in India led by pricing, profitability to improve with gross margins expanding sequentially

7 Jan 2022 , 11:50 AM

Godrej Consumer Products expects to deliver single-digit growth in sales driven by pricing, while profitability is seen to improve sequentially with expansion in gross margins during the third quarter ending December 2021 (Q3FY22) period. The company has announced an overall summary of the operating performance and demand trends for Q3.

In Q3FY22, challenges like unprecedented cost inflation and Indonesia business performance have played out. This has resulted in low volume growth and high price growth; high gross margin dilution and EBITDA margin dilution.

For India business, Godrej Consumer expects to deliver close to high single-digit sales growth, largely driven by pricing. It said, "We witnessed broad-based sales growth in both, our Home Care and Personal Care categories."

In the Indonesian business, Godrej Consumer expects a marginal decline in constant currency sales growth. Adding the company said, "We continue to put building blocks in place to drive category development and general trade distribution expansion, to ensure gradual recovery in the short term."

In other geographies like Africa, the USA and the Middle East -  growth momentum continued across most of our key countries of operations. Godrej Consumer said, "We expect to deliver constant currency sales growth in the teens. We continue to focus on driving sustainable, profitable sales growth."

On a consolidated basis, Godrej Consumer said that "we continue to leverage our category and geographic portfolio and expect to deliver close to high single-digit sales growth. We continue to remain on track with our objective of driving double-digit sales growth as seen in the first nine months of the financial year."

In terms of profitability, Godrej Consumer said that "we expect our quality of profits to improve with sequentially expanding gross margins, however, lower on a year-over-year basis due to unprecedented cost inflation. In line with our strategy of driving category development, we had sequentially higher marketing spends. The net result would be a dilution in operating margins during the quarter, on a year-over-year basis."

On Friday, at around 11.44 am, Godrej Consumer was trading at Rs960.60 per piece up by 1.3% on Sensex. The stock was near the day's high of Rs962.15 per piece.