The company, under a new chief executive officer, Aasif Malbari, is seeking to fix the growth graph, which has been in the slow lane over the last five years. While organic unit volume growth for India as well as international operations stood at 4 per cent, organic sales growth was in the 6-7 per cent range, as was operating profit growth. The issue behind the structural weakness over this period has been flattish revenue growth in core categories, in addition to pressure on profitability.
To rectify this, the company will be focusing on improving the growth trajectory of its core portfolio comprising soaps and household insecticides (HI). It believes that HI is a long-term opportunity, with its category penetration rising from 65 per cent to 80 per cent over the last few years. The company believes there is headroom for higher usage within households, coupled with premiumisation. The majority of users in the category continue to use low-cost burning formats. GCPL is eyeing market share gains in burning formats on the back of its patented mosquito repellent molecule Renofluthrin, or RNF. It is also looking at accelerating premium mosquito format upgrades through the right price point and robust execution. In addition, the company is expanding the addressable market size by entering adjacent formats across various pests.
In skin cleansing (soaps), the company has been consistently gaining market share over the past decade, and the share has stabilised in the past three years. It has also expanded into the skin cleansing category beyond soaps through hand wash, face wash and foam body wash. The broader skin-cleansing market is expected to grow in high single digits, offering a significant runway for GCPL to build share beyond soaps. In hair colour, it is looking at upgrading two-thirds of its users in traditional formats to cream/shampoo formats and subsequently premium hair colour.
To keep the portfolio refreshed, boost new product development and sustain outperformance, the company is investing more in research and development (Rs 150 crore), distribution expansion and digital marketing (Rs 200 crore annually from FY28).
It has retained FY27 guidance of high single-digit volume growth and double-digit revenue/operating profit growth despite near-term investment and channel headwinds. The India performance could come under pressure due to inventory correction (Rs 120 crore to Rs 150 crore, or 1.5 per cent of India sales) over the next three quarters, but that could be offset by improved performance in the international business.
Commenting on the company’s mid-teens consolidated revenue and net profit growth in the medium term, Motilal Oswal Research says though its guidance is encouraging, consistency in performance and achievement of initial milestones will be critical for the stock. Analysts led by Naveen Trivedi of the brokerage believe that the core portfolio remains under-indexed, while the new growth businesses offer significant scaling-up potential. The brokerage has a buy rating with a target price of Rs 1,150.
HDFC Securities, too, believes that execution remains central to performance and valuations. Nitin Gupta and Ishant Lalwani of the brokerage point out that the stock’s 27 per cent year-to-date correction reflects inflationary pressures and abrupt management changes. While a prolonged El Niño could keep input volatility elevated, corrective actions are underway. The brokerage expects any rerating to be execution-led, with consistent delivery under the new leadership as the key catalyst. The brokerage has a buy rating with a target price of Rs 1,100.
