Godrej Consumer's operating margin drops 2.61 points sequentially
Costs grew faster than revenue in Q1FY27, while a lower tax rate supported sequential net profit growth.
Filed 07 Aug 2026, 11:54 IST · Godrej Consumer Products Ltd (GODREJCP)
Key takeaways
- Consolidated revenue rose +15.39% YoY, but expenses rose +15.40%, leaving operating margin almost unchanged at 18.96%.
- Sequentially, operating margin fell 2.61 percentage points as expenses grew +11.93% against revenue growth of +8.33%.
- Net profit rose +11.68% QoQ as the tax rate fell 5.22 percentage points, while other income contributed 5.37% of pre-tax profit.
Price around the results
Revenue momentum did not carry into margins
Godrej Consumer Products reported consolidated revenue of Rs 4,225.47 cr, up +15.39% YoY and +8.33% QoQ. The year-on-year margin was broadly stable because expenses grew at almost the same pace as revenue. Sequentially, however, the operating margin fell to 18.96% from 21.57% as cost growth outpaced revenue growth.
Lower tax rate softened the sequential earnings impact
Operating profit declined -4.76% QoQ even as revenue increased, reflecting the 2.61 percentage-point margin contraction. Net profit still rose +11.68% QoQ because the tax rate fell 5.22 percentage points, while interest expense declined -4.77%. Other income was Rs 36.32 cr, equal to 5.37% of pre-tax profit, so it was a contributor to reported earnings but not the main driver.
Margin remains above peers but has reversed from the FY26 peak
Operating margin was nearly flat YoY, edging down 0.01 percentage points from Q1FY26. The quarterly trend had improved from 18.97% in Q1FY26 to 21.57% in Q4FY26, before reversing in Q1FY27; this is the first decline after three consecutive quarterly increases. At 18.96%, the margin was 2.82 percentage points above the 16.14% median for the 32 Fast Moving Consumer Goods peers that had reported.
The stock's decline was within its usual result-day range
The stock fell 2.53% on the results day, with volume at 10.37 times its normal level. That move was smaller than the 2.88% median absolute move after its last eight results. The stock had declined after six of those eight results and risen after two.
Q1FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹4,225 cr | ₹3,900 cr | +8.33% | +15.39% |
| Other income | ₹36 cr | ₹-24 cr | — | -44.11% |
| Expenses | ₹3,424 cr | ₹3,059 cr | +11.93% | +15.40% |
| Operating profit | ₹801 cr | ₹841 cr | -4.76% | +15.37% |
| Operating margin (%) | 18.96% | 21.57% | — | — |
| Interest | ₹86 cr | ₹90 cr | -4.77% | -0.61% |
| Depreciation | ₹75 cr | ₹76 cr | -1.29% | +26.62% |
| Profit before tax | ₹677 cr | ₹651 cr | +3.85% | +10.24% |
| Tax | ₹172 cr | ₹200 cr | -13.86% | +6.69% |
| Net profit | ₹505 cr | ₹452 cr | +11.68% | +11.51% |
| EPS (₹) | ₹4.93 | ₹4.42 | +11.54% | +11.54% |
Operating margin of 18.96% compares with a Fast Moving Consumer Goods sector median of 16.14% across 32 peers that have reported Q1FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -2.53% | -2.27% |
Volume on the results session was 10.37× its 20-day average.
What to watch
- Whether operating margin recovers above 21.57%, the Q4FY26 level.
- Whether expense growth falls below revenue growth after the current +11.93% versus +8.33% gap.
- Whether the tax rate remains close to 25.43% after the 5.22 percentage-point sequential decline.