Buy Godrej Consumer Product; target of Rs 1460:Sharekhan

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26 Aug, 2025 12:21

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Sharekhan research report on Godrej Consumer ProductGodrej Consumer Products Ltd (GCPL) posted a strong performance in Q2FY2016 with a steady revenue growth of ~10% and above 30% growth in the adjusted PAT. The consolidated revenue grew by 10% (largely a volume-led growth) at Rs2,244.9 crore in Q2FY2016. As anticipated, the GPM improved by more than 400BPS on the back of decline in the palm oil prices (by ~20%) and the prices of crude derivatives (largely packaging and LAB). The OPM improved by 156BPS to 18.1% and the operating profit grew by 19%. The higher other income and lower incidence of tax led to a 31% growth in the adjusted PAT (before minority interest and exceptional item).GCPL’s long-term growth prospects remain intact with focus on new product launches in appropriate interval and improving the reach of low penetrated categories. We have broadly maintained our earnings estimates for FY2016 and FY2017 (introduced FY2018 earnings estimate through this note). We maintain our Buy recommendation on the stock with a revised price target of Rs1,460 (rolling it over to FY2018E earnings). The stock is currently trading at 31x its FY2017E earnings.

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