Angel Broking neutral on Godrej Consumer Products

Angel Broking has maintained a neutral rating on Godrej Consumer Products (GCPL), in its May 08, 2014 research report. The research firm expects GCPL‘s consolidated top-line and bottom-line to grow at a CAGR of 16.8% and 22.6% over FY2014-16E.

May 08, 2014 / 15:57 IST

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Angel Broking's report on Godrej Consumer Products (GCPL)

For 4QFY2014, Godrej Consumer Products (GCPL) posted a disappointing performance on the top-line front, impacted by slowdown in domestic market and a flat revenue performance by the Indonesian business. However, the company reported a 13.4% yoy growth in its adjusted PAT, aided by improvement in profits of international business.

For 4QFY2014, GCPL posted a lower-than-estimated 12.2% yoy growth in top-line to Rs 1,924cr. The company’s domestic business posted a revenue growth of 12% yoy. The Soaps segment posted a weak top-line growth of 1% yoy. Volumes de-grew by 4% yoy in the segment. Growth in the Hair Colour segment decelerated and stood at 16% yoy. Household Insecticides recovered from the modest performance in 2QFY2014 and posted a 17% yoy growth for the quarter. While the Indonesian business posted a flat performance on the top-line front, Africa, Europe and Latin America posted a growth of 39%, 16% and 5% respectively. The OPM came in higher than estimated at 17.4%, aided by price hikes carried out by the company in the Indonesian business. The company’s Africa and LATAM businesses too posted margin expansion of 850bp and 1,040bp respectively. The company’s international business posted an EBITDA growth of 30%.

Outlook and valuation: Going ahead we expect GCPL’s consolidated top-line and bottom-line to grow at a CAGR of 16.8% and 22.6% over FY2014-16E. At the current market price, the stock is trading at 23.0x FY2016E consolidated earnings. We maintain our Neutral rating on the stock", says Angel Broking research report.

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