Accumulate Godrej Consumer Products; target of Rs 1541: KR Choksey

KR Choksey's research report on Godrej Consumer Products

For Q1FY25, GCPL reported revenue of INR 33,316 Mn (-3.4% YoY, -1.6% QoQ), missed our estimates by 4.2%. Q1FY25 EBITDA of INR 7,262 Mn (+6.5% YoY,-4.5% QoQ), missed our estimates by 4.4%. EBITDA margin was at 21.8%, expanded by 203 bps YoY/ (-66 bps QoQ). Adj. PAT (excl. exceptional items) of INR 4,728 Mn (+7.6% YoY, -2.9% QoQ) exceeded our estimates by 4.0%, driven by exceptional items and lower-than-expected depreciation and tax rates. GCPL declared an interim dividend at INR 5.0/share for FY24-FY25. We slightly tweaked FY25E estimates and raised FY26E Adj. EPS by 1.2%, considering the deepening of market penetration and expansion of product basket through new launches, which is expected to drive higher volumes and profitability.

Outlook

We revise the P/E multiple to 55.0x (earlier: 50x) on FY26E EPS of INR 28.0 (earlier: INR 27.7), resulting in a target price of INR 1,541/share (earlier: INR 1,426). Given a 10.5% upside potential from the CMP, we maintain our “ACCUMULATE” rating on Godrej Consumer Products Ltd.

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