Mumbai: Shares of Godrej Consumer Products Ltd (GCPL) came under pressure on Thursday, September 3, falling as much as 5.02% to ₹859.55, after newly appointed Managing Director and CEO Aasif Malbari outlined the company’s priorities and growth ambitions for FY27.
Malbari, who took charge around three weeks ago following the sudden resignation of former CEO Sudhir Sitapati, used his first analyst and investor interaction to assess the company’s performance over the past five years and set out a strategy focused on faster execution, stronger volume growth, innovation and improved profitability.
The market reaction came despite management reiterating its growth ambitions for the current financial year. Brokerages remained divided on the near-term outlook, with Macquarie retaining an Outperform rating and a ₹1,100 target, while Morgan Stanley maintained an Equal-weight rating with a ₹1,204 target.
New CEO acknowledges execution challenges
Malbari’s first investor call focused heavily on execution. He acknowledged that GCPL had not fully converted its strategic plans into business results over the past few years.
The company’s core-category revenue growth has remained largely flat, while profitability has faced pressure. The new CEO also highlighted challenges in India and Indonesia, with several international businesses continuing to operate at relatively low profitability.
The assessment comes shortly after Sitapati resigned as MD and CEO on August 11, following more than five years at the helm. The leadership change had initially triggered a sharp sell-off in GCPL shares, with the stock falling around 10% on August 12.
Malbari’s appointment was intended to provide continuity while bringing a stronger focus on execution. Before becoming CEO, he served as GCPL’s global chief financial officer and had experience across the company’s international operations.
Double-digit growth remains the FY27 ambition
Despite acknowledging shortcomings, Malbari has not abandoned GCPL’s broader growth strategy.
The company wants to return its core categories to industry-level growth while using newer categories and businesses to drive overall growth. Management has expressed an ambition for double-digit underlying volume growth and double-digit profit growth in FY27.
This marks an important shift in emphasis from simply developing strategies to ensuring those strategies translate into measurable business performance.
The company has indicated that faster decision-making, stronger accountability and better execution will be central to achieving its targets.
GCPL’s June quarter performance provides a relatively strong starting point. Consolidated revenue increased around 19% year-on-year, while underlying volume growth stood at 9%. Consolidated net profit rose 11.5% to ₹504.5 crore, while revenue from operations increased 18.3% to ₹4,225.5 crore.
₹125-150 crore inventory correction planned
One of the immediate priorities is correcting inventory levels in India’s general trade channel.
GCPL plans to reduce trade inventory by approximately ₹125-150 crore over the next three quarters. The company is also looking to improve inventory turnover, with management targeting a reduction in inventory turnover days from around 20 to 10.
Inventory correction can temporarily affect reported sales as distributors reduce their existing stocks. However, the objective is to create a healthier distribution system and improve the efficiency of working capital over the longer term.
The move is among the factors that analysts are watching while assessing the company’s near-term earnings performance.
More investment in research and digital marketing
Innovation is another major component of Malbari’s strategy.
GCPL plans to invest around ₹150 crore in research and development, while also increasing its spending on digital marketing. The company believes greater investment in innovation can help strengthen its core brands while supporting expansion into newer categories.
The company is also looking to sharpen its focus on its core Indian portfolio, including soaps, hair care and fragrances.
In the personal-care space, GCPL is seeking to broaden its skin-cleansing platform. It also sees opportunities to increase premiumisation in hair care and expand its fragrance business.
New categories expected to drive growth
Alongside its established portfolio, GCPL is placing greater emphasis on newer businesses and adjacent categories.
The company has been developing products such as Godrej Rizz in dishwashing and Godrej Zapp in stain removal and toilet cleaning. It is also expanding its pet-care business under the Ninja brand.
The pet-care business, launched in 2025, currently has an annual run rate of around ₹10 crore. Management believes it can take this figure close to ₹50 crore by the end of FY27 and eventually build the business into a ₹500-crore operation by FY30.
The strategy reflects GCPL’s broader attempt to create new growth engines while strengthening its established FMCG categories.
Brokerages take different views
The stock’s Thursday decline highlights the cautious approach investors are taking towards the new management’s plans.
Macquarie retained its Outperform rating and ₹1,100 target price, arguing that GCPL’s FY27 targets remain intact despite the planned inventory correction.
Morgan Stanley, meanwhile, retained its Equal-weight rating with a ₹1,204 target. The brokerage noted that management had reiterated its medium-term ambitions and FY27 targets.
The difference in ratings reflects the balance between GCPL’s growth potential and the execution challenges that the new CEO has openly acknowledged.
What investors will watch
For investors, the key question now is whether GCPL can convert its strategic initiatives into sustained volume and profit growth.
The company enters FY27 with strong recent quarterly numbers, but management has also acknowledged that core-category growth and profitability have not been strong enough over the longer term.
The planned inventory correction could create short-term pressure, while higher spending on R&D and digital marketing could increase costs before new initiatives generate meaningful returns. At the same time, successful execution in core categories and new businesses could provide the growth momentum management is targeting.
The Thursday share-price decline suggests that investors remain cautious despite the company’s stated ambitions.
With Aasif Malbari now leading GCPL, the focus will increasingly shift from strategy announcements to execution. The company’s ability to deliver double-digit volume and profit growth, improve inventory efficiency and scale newer categories will be crucial in determining whether the new management can restore stronger and more consistent performance.
