Shares of Godrej Consumer Products Ltd (GCPL), a leading FMCG player, came under the pressure of Wednesday’s trade session, October 8, under the sale of a lows of £ 1.120 per piece after the company indicated that the second quarter profitability was likely to fall as a result of a temporary slowdown. In its Q2 update, the company said that the recent GST rate reduction has led to short-term disruptions on trade channels, as distributors and retailers focused on liquidating old stock before starting again. This has delayed the flow of new orders and temporarily postponed consumer purchases, which affected both growth and margins. As a result, the company expects its independent business to produce the growth of the mid-single-digit value supported by a low-single-digit-digit volume growth (UVG). At a consolidated level, GCP expects the income of the mid-single figures in INR terms. However, the company noted that the GST transition is expected to have a short-term impact on profitability, with Ebitda likely to fall for the term. Within its categories, the home care portfolio still shows a strong momentum and is likely to grow with high-single-digit value, while the personal care segment is expected to take a fall with a low single-digit drop, which is largely driven by weakness in the soap category. The company believes it is a temporary adjustment and remains confident in the long -term benefits of the reforms. In the international markets, GCPL said its Indonesian business is still facing a greater competitive price pressure in the major categories, which is expected to lead to a low-single-digit decrease in value growth, although with slightly positive UVG. Meanwhile, the Godrej Africa, the US and the Middle East (Gaum) are planning to deliver its third consecutive quarter of strong topline growth, with expectations of double-digit value and volume growth. In addition to GCPL, other FMCG major, including Hindustan Unilever and Dabur, marked short-term sales breakthroughs in September, before the government’s GST cuts, while retailers rushed to liquidate the existing inventory for higher prices. The shares have remained under pressure over the past three months. The company’s shares have been under pressure since it reached a new peak in September last year. Although the stock showed some resilience in March and April, it could not maintain the same momentum in the following months, and resumed its loss of loss, which has now been extended until October. After the last two months in the red, with a accumulated loss of 7.3%, the share has so far dropped 3% in the current month. From its £ 1.541 high, the share has now fallen 27.31%. Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or brokerage companies, and not of currency. We advise investors to check with certified experts before making investment decisions.
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