Buy Godrej Consumer; target of Rs 612: Firstcall Research

Firstcall Research is bullish on Godrej Consumer Products and has recommended buy rating on the stock with a target of Rs 612 in its May 17, 2012 research report.

“Godrej Consumer Products (GCPL) is a leader among India's Fast Moving Consumer Goods (FMCG) companies, with leading Household and Personal Care Products. The company employs 950 people and has three state-of-the-art manufacturing facilities at Malanpur (M.P.) Guwahati (Assam) and Baddi (H.P.).Their focus is on providing their customers with innovative, value for money solutions for meeting their daily needs and improving the quality of their life. This is achieved through the brands the company markets. They also have a strong emerging presence in markets outside India. As part of increasing our global footprint, we recently acquired 51% rights in the Darling group in Africa. With acquisitions of Tura, a leading medicated brand in West Africa, Megasari Group, a leading household care company in Indonesia and Issue Group and Argencos, two leading hair colorant companies in Argentina, Keyline Brands in the United Kingdom, Rapidol and Kinky Group, South Africa and Godrej Global Mideast FZE, we own international brands and trademarks in Latam, Europe, Australia, Canada, Africa and the Middle East.”

“Godrej Consumer products has posted a consolidated net profit of Rs. 1926.50 million for the quarter ended March 31, 2012 whereas the same was at Rs.1416.80 million for the corresponding quarter last year, a rise of 35.98%. Net sale has increased by 31.59% to Rs. 13249.40 million for the quarter ended March 31, 2012 whereas the same was at Rs.10068.60 million for the quarter ended March 31, 2011. Total Income marginally increased to Rs.13433.20 million for the quarter ended March 2012. The EPS is stood at Rs.5.66 for the quarter ended March 2011.”

“At the current market price of Rs 542, the stock is trading at 20.28 x FY13E and 17.44 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.26.73 and Rs.31.07 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 23% and 28% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 15.94 x for FY13E and 13.63 x for FY14E. Price to Book Value of the stock is expected to be at 4.92 x and 3.81 x respectively for FY13E and FY14E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 612 for medium to long term investment,” says Firstcall Research report.   

Non-Institutions holding more than 90% in Indian cos   

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