Godrej Consumer Products Ltd. share price target

The company is focused on strengthening its supply chain operations and enhancing its distribution network to meet the robust demand in Household Insecticides, Personal Wash, and Hygiene and Hair care segments. However, increase in commodity prices is expected to affect margins in the near-future. Hence, we maintain our HOLD rating on the stock with a revised target price of Rs. 992 based on 46x FY23E EPS. Broad based growth across Home care and Personal care GCPL's consolidated revenue rose 8.5% YoY to Rs. 3,164cr in Q2FY22, aided by broadbased growth within categories of Home care and Personal care. Home care segment...

Godrej Consumer Products (GCPL) result was in-line with our estimates. India business performance has been resilient (10%YoY revenue growth on a base of 10%). Home care and personal care grew at high single digit and double digit rate led by market share gains in soap and hair color. Positively; GCPL has launched Goodknight Jumbo Fast Card nationally while Godrej Expert Easy 5 minute shampoo is scaling up well. In international business; South Africa performed well while other markets remained soft. Indonesia continues to underperform for 5th consecutive quarter largely due to macroeconomic uncertainties. Gross margin contraction has been steep primarily due to inflation in palm oil. Management expects operating margin to normalize by 4QFY22....

We hosted Mr. Akhil Chandra, Business Head (Indonesia), GCPL for an investor/analyst interaction. Akhil provided clarity and insights around GCPL’s Indonesia strategy even as the operating environment continues to be tough. We like (1) well-positioned product portfolio with leading shares in respective categories, (2) agile innovation and execution capabilities particularly in the hygiene category; focus on personal hygiene to drive structural growth is also impressive, (3) focus on improving go-to-market (GTM) execution and the distribution expansion achieved in the last 3 years.

The Indonesia business has been seeing gradual recovery in demand post the second COVID wave despite a tough macroeconomic situation. Given the recent bold economic reforms implemented by the Indonesian government, Mr Chandra is confident GCPL has the building blocks in place...

Despite having a positive outlook on topline growth and operational performance of the business, we expect raw-material inflation could impact profitability in the near-term. Given limited upside at current rich valuation post-recent price rally, we downgrade our rating on the stock to HOLD with a revised TP of Rs. 1,030 based on 52x FY23E EPS. Robust demand across categories deliver topline growth In Q1FY22, GCPL's revenue grew by 24.4% YoY to Rs. 2,894cr, on the back on broadbased growth recorded across the segments. Domestic business posted 20.3% YoY growth to Rs. 1,661cr (+10.7% QoQ), primarily driven by double-digit growth in...

Godrej Consumer Products (GCPL) result was in-line with our estimates. India business continues to grow at high double digit on a base of 5%YoY driven by strong growth within categories of home care and personal care. GCPL continues to gain market share in soap and hair colour portfolio. In international market; except Indonesia market, which was impacted (zero revenue growth in CC) due to 2nd wave induced lockdowns, performance of other geographies remained promising (48-60%YoY). Gross margin witnessed sharp contraction despite 4-5% price hike during the quarter due to significant increase in raw material prices. Management expects inflationary pressure...

We remain positive on the stock with strong demand in hygiene business and resurgence in household insecticides. We expect margins to improve gradually in coming quarters and reiterate our BUY rating on the stock with a rolled forward TP of Rs. 930 based on 43x FY23E EPS. Topline grows on sustained demand Q4FY21 revenue increased by 26.8% YoY to Rs. 2,731cr, aided by continued demand for company's products across all the geographies. Domestic business saw impressive growth of 34.6% YoY, led by strong growth momentum in soaps (~41% YoY) and...

Godrej Consumer Products (GCPL) result was better than our estimates. Africa continues to positively surprise with +30% YoY revenue growths while Indonesia grew 5%YoY (on a stable base). India business also posted strong revenue growth led by continued momentum in soap portfolio (+41%YoY) and strong recovery in hair color (+25%) and HI business (+34%). Operating profit margins contracted due to input cost inflation and higher operating costs. Appointment of Mr. Sudhir Sitpati (from HUL) as MD and CEO is very positive as GCPL is likely to be benefited of his category management and marketing skills. We maintain our revenue estimates. Our EPS estimates are revised...

Mr. Sitapati comes with impressive experience in heading HUVR's F&R; business and as part of the senior management team in the Detergents business, which have done very well under his tenure and where marketing campaigns in both segments have had a high value impact. His appointment as MD and CEO for five years, as well has his relative young...

Godrej Consumer Products (GCPL) result was better than our estimates. Africa continues to positively surprise with strong double digit revenue growth. India business also remained on strong footing driven by continued double digit revenue growth momentum in soap portfolio and strong recovery in hair color (grew 14% YoY vs -5%YoY growth in 2QFY21). Revenue growth in House Hold Insecticide segment remained healthy at 7%YoY. Overall, GCPL continues to benefit from health and hygiene tailwind. Gross margins contracted due to inflationary raw material prices, however strict cost control led to EBITDA Margins being flat YoY. We revise our FY21-23 EPS estimates...