Deven Choksey Institutional Research has maintained an "ACCUMULATE" rating on FMCG major Godrej Consumer Products Limited, projecting a target price of Rs 1,275 against the current market price of Rs 1,122, which implies a modest potential upside for investors. The Q2FY26 results signal measured optimism amidst sectoral turbulence, with the company's consolidated revenue rising 4.3% year-on-year. While macroeconomic headwinds in Indonesia and Latin America have restrained overall profitability, domestic resilience and strategic acquisitions provide a forward-looking narrative. The research reports underscores sustained volume growth, judicious cost management, and compelling prospects for recovery in key segments as the fiscal year progresses.

Investment Recommendation and Price Targets

The research house advocates an ACCUMULATE strategy, with a current target price of Rs 1,275. Key price levels for investors to track include support around Rs 1,080 and resistance at the target price of Rs 1,275. The stock's 52-week trading range moves between Rs 980 and Rs 1,309, suggesting strategic accumulation opportunities within this band, considering the company’s operational outlook and growth prospects.

Quarterly Revenue and Volume Growth Insights

Consolidated revenues climbed 4.3% year-on-year to Rs 38,251 million during Q2FY26, slightly missing analyst expectations. This growth was underpinned by a 3% volume expansion, driven predominantly by strength in the Indian domestic market and robust performance in home care and hair color segments. However, margins contracted due to the GST transition-induced trade destocking and adverse conditions in international markets, especially Indonesia and Latin America.

Segment-wise Performance Dynamics

The Home Care segment delivered a solid 6% year-on-year growth, primarily propelled by air fresheners and fabric care products. Innovations and market share gains in household insecticides, including electrics and incense sticks, also bolstered this momentum. Conversely, the Personal Care segment experienced a 2% contraction, largely attributable to the impact of GST-related inventory adjustments within the personal wash category. Management anticipates a rebound in this category post-GST rationalization in H2FY26.

Mixed Results in International Markets

Regions including Africa, the USA, and the Middle East recorded a vigorous 25% increase in sales, with EBITDA growth of approximately 20% supported by strong demand in hair fashion and air fresheners. By contrast, the Indonesian market faced a 7% decline in revenue amid pricing pressures and distributor structural changes, though volume growth remained slightly positive. Latin America continued to exhibit volatility, which, alongside Indonesia, moderated consolidated EBITDA growth expectations.

Outlook and Strategic Initiatives

The second half of FY26 is expected to showcase strengthening fundamentals, led by recovering personal wash volumes and normalizing trade activities post-GST adjustment. The acquisition of Muuchstac, a high-margin men’s face wash brand with an INR 800 million revenue run rate, is set to augment Godrej’s position in high-growth personal care segments. The company’s anticipation of normalized standalone EBITDA margins in the 24-26% range underscores its confidence in operational leverage and cost efficiencies.

Financial Performance Highlights

EBITDA for Q2FY26 stood at Rs 7,333 million, reflecting a 3.7% decline year-on-year with margins contracting by 160 basis points to 19.2%. Adjusted PAT witnessed a marginal dip of 2% to Rs 4,890 million. Robust capital structure, manageable leverage, and steady cash flow generation strengthen the company's financial footing for growth.

Projected Growth and Valuation Metrics

Analyst projections suggest revenue growth from Rs 143,643 million in FY25 to Rs 188,130 million by FY28, with adjusted PAT scaling from Rs 19,192 million to Rs 28,785 million over the same period. The stock’s valuation at 46x FY27 estimated EPS reflects confidence in the company’s long-term earnings growth potential, driven by market expansion, portfolio strength, and margin recovery.

Investor Action Points

Current valuations and the evident near-term challenges call for a measured accumulation approach ahead of anticipated recovery and margin normalization in H2FY26. Investors should monitor key support and resistance levels—Rs 1,080 and Rs 1,275 respectively—while considering the company's strategic portfolio expansions and geographic diversification that underpin its growth trajectory.