Muted near-term margin outlook for Godrej Consumer, stock sheds 3.5%

Sales growth in Q2 came in line with estimates

A weak margin outlook in the near term and lack of fresh triggers may keep the Godrej Consumer Products (GCPL) stock under pressure. The stock, post a tepid Q2 and marginal downward revision in earnings estimates, declined 3.5 per cent in trade on Friday.

Even as overall consolidated sales of the company, which owns the Good Knight and Cinthol brands, grew 8.5 per cent YoY, the operating profit saw a decline due to the sharp contraction in margins. A steep rise in palm oil prices and higher crude oil prices dented overall gross profit margins by about 616 basis points