Godrej Consumer (GCPL’s) domestic business demand trends remain mixed with urban demand (~78% of domestic business) showing early signs of recovery while rural demand being sequentially flat. International business demand trends remain weak sequentially primarily driven by macro economic trends.
As per management, growth rate for the Indonesia business could taper off to low double digits (vs. earlier guidance of high teens growth) in the medium term given slow economic growth and currency depreciation, however operating margins would not get impacted due to lower input costs. For the African business [1/3rd revenue contribution each from West Africa (100% stake), South Africa (90% stake) and East Africa (51% stake)] the company has taken calibrated price hikes given which price gap vs. organised players has narrowed (had earlier held prices with an intension to gain market share resulting in higher revenue growth though delivering lower margins). We believe GCPL will likely acquire the rest of the Darling businesses in the next 12-18 months. LatAm business (2/3rd from Argentina and 1/3rd from Chile) continues to witness cost rationalization benefits under Project Iceberg and the company is evaluating further areas of actions for the UK business.