Godrej Consumer Products share price was trading firm on Tuesday as overall markets have staged a strong recovery after recent selling. Godrej Consumer Products was trading at Rs 1,195 at the time of publication of this report, up by 2.7 percent. During the current year, the stock has offered 10% return to investors despite volatile market conditions. Emkay Research has revised its stance on Godrej Consumer Products Ltd (GCPL), upgrading it from “Reduce” to “Buy,” with a revised 12-month target price of Rs 1,325 per share. The brokerage highlights visible signs of a rebound across key business segments, particularly India’s home care vertical and the GAUM (Godrej Africa, USA, and Middle East) cluster. Margin expansion, a recovery in volume growth, and international restructuring form the basis for renewed optimism. Emkay expects earnings to rebound meaningfully by FY26, with EBITDA and PAT growth projections aligned with recovering fundamentals.

India Home Care Drives Sequential Growth Recovery

India's Q4 topline is projected to grow 8% year-on-year, with underlying volume growth (UVG) pegged at 5%. The home care segment, a longstanding pillar of GCPL’s domestic portfolio, is expected to post mid-teens volume growth and 16% revenue expansion, up from mid-single digit growth last quarter.

Personal care remains a challenge as price hikes in the personal wash portfolio contributed to a mid-single-digit volume contraction. Nonetheless, the segment may still clock a 2% revenue increase. Domestic EBITDA margins are expected to remain steady sequentially at 22.6% but are likely to contract 400 basis points compared to the same period last year, largely due to inflationary headwinds. Emkay anticipates an 8% year-over-year decline in India EBITDA for Q4FY25.

International Portfolio Sees Renewed Momentum

International operations are forecast to show early signs of a turnaround.

Indonesia, which accounts for 15% of GCPL’s revenue, is expected to post modest revenue growth despite a strong base from the prior year. Emkay projects 2% revenue growth and an EBITDA margin contraction of 270 basis points to 22.6%, resulting in a 9% EBITDA drop.

The GAUM region offers a more compelling picture, with expected organic UVG growth of 22% and reported revenue growth of 13%. EBITDA margins are likely to remain in the mid-teens, supporting a robust 17% EBITDA increase. Overall, GCPL’s international business is expected to post mid-single-digit growth in both revenue and EBITDA.

Margin Revival Likely with Input Price Stabilization

Emkay sees moderation in input costs, particularly palm oil, aiding margin recovery going forward. With the harvest season in Q1 and Q2 expected to ease raw material prices, GCPL should benefit from higher operating leverage.

GCPL’s EBITDA margins are expected to rise to 21.5% in FY26, improving from 20.6% in FY25. Earnings per share are projected to grow at a compounded rate of 20.8% in FY26 and 15.5% in FY27. This rebound is supported by continued optimization of international operations and improved domestic pricing strategies.

Financial Snapshot and Valuation Multiples

Here’s a snapshot of GCPL’s consolidated financials and projections:

The stock currently trades at 60.3x FY25E earnings and offers a potential upside of 14.5% from the current price of Rs 1,157 based on Emkay’s target of Rs 1,325.

Challenges: Inflation, Base Effects, and Execution Risks

While the outlook is bullish, risks remain. Emkay cautions about:

Inflation in the Indian market, particularly in raw materials.

Price sensitivity in personal care categories which could impact volumes.

Execution challenges in integrating global operations, especially in GAUM.

However, Emkay notes that these are largely embedded in the base, and the company’s long-term execution strength and category leadership may help offset short-term volatility.

Investor Takeaway and Final Outlook

With the home care category showing meaningful acceleration, GAUM performance recovering, and raw material costs stabilizing, Emkay believes GCPL is on the cusp of a sustained rebound.

The “Buy” rating reflects confidence in the company's earnings trajectory, and the stock remains attractively positioned for investors seeking defensive exposure in the consumer space.

A key catalyst will be margin expansion and topline recovery in both domestic and global portfolios.