Buy Godrej Consumer Products; target of Rs 1675: Sharekhan

Sharekhan's research report on Godrej Consumer Products

Godrej Consumer Products Limited’s (GCPL’s) Q1FY2025 numbers were below our expectation as currency depreciation hit consolidated sales growth. Revenues decreased by 3% y-o-y; OPM expanded by 203 bps to 21.8%; PAT grew by 14% y-o-y. Management targets India business to grow in low double-digits (high single digit volume growth); GUAM and Indonesia business EBIDTA margins to improve to 15% and 25% in the near term. The company entered the Rs. 5,000 crore pet care category by partnering with Godrej Agrovet for manufacturing. GCPL will be investing Rs. 500 crore in the next five years.

Outlook

Stock trades at 63x and 54x its FY2024E and FY2025E earnings, respectively. We maintain a Buy with revised PT of Rs. 1675.