Godrej Consumer Products Q2 Profit Declines 6.5% Amid GST Issues, Acquires Men's Grooming Brand Muuchstac

Godrej Consumer Products Limited (GCPL) announced its financial results for the September quarter (Q2 FY26), reporting a consolidated net profit of Rs 459 crore, a 6.5% decrease from the previous year, falling short of analyst expectations. This decline was primarily attributed to temporary disruptions stemming from Goods and Services Tax (GST) transitional issues, which the company had previously flagged.

Consolidated revenue increased by 4.3% year-on-year to Rs 3,825 crore, meeting market expectations. However, Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) saw a 3.5% decline to Rs 733 crore, also below estimates, with EBITDA margins narrowing by 150 basis points (bps) to 19.2% compared to 20.7% last year. Despite these short-term headwinds, GCPL expressed confidence in a stronger performance in the second half of the fiscal year.

In a significant strategic move, GCPL is acquiring Muuchstac, a men's grooming brand, for Rs 449 crore through an all-cash transaction. This acquisition is aimed at strengthening GCPL's position in the men's grooming sector, particularly in the fast-growing men's facewash category where Muuchstac holds a leading online presence. Muuchstac generated approximately Rs 80 crore in revenue and around Rs 30 crore in adjusted EBITDA in the twelve months ending September 2025.

**Impact**: The immediate impact on GCPL's stock may be influenced by the miss on profit estimates and margin contraction. However, the acquisition of Muuchstac is a key positive development, strategically positioning GCPL to capitalize on the high-growth potential of the men's grooming market, especially the men's facewash segment which is growing at over 25% annually. The company plans to leverage its extensive distribution network and supply chain capabilities to scale the Muuchstac brand, potentially expanding into other men's skincare categories. This move is expected to drive future revenue growth and enhance profitability in high-margin segments. The overall long-term outlook for the company appears bolstered by this strategic expansion. Impact Rating: 7/10

**Difficult Terms**: * GST (Goods and Services Tax): A comprehensive indirect tax regime implemented in India on the supply of goods and services. * Consolidated Net Profit: The total profit of a company, including its subsidiaries, after deducting all expenses and taxes. * EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): A metric used to assess a company's operational profitability before accounting for financing, tax, and non-cash expenses. * EBITDA Margins: Represents EBITDA as a percentage of revenue, indicating operational efficiency and profitability. * bps (basis points): A unit of measure equal to one-hundredth of a percentage point (0.01%). A 150 bps decrease means a 1.50 percentage point drop. * Ind-AS (Indian Accounting Standards): Accounting principles followed in India, largely aligned with International Financial Reporting Standards (IFRS). * One-offs: Unusual or infrequent income or expenses that do not reflect a company's normal business operations. * Constant Currency: A financial reporting method that adjusts for foreign currency exchange rate fluctuations to provide a clearer view of underlying business performance.