Sharekhan is bullish on Godrej Consumer Products Limited has recommended buy rating on the stock with a target price of Rs 865 in its research report dated March 06, 2020.
Sharekhan's research report on Godrej Consumer Products Limited
Coronavirus outbreak has driven up demand for small soaps, hand-wash and hand sanitisers; Godrej Consumer Products (GCPL) will benefit from higher demand of sanitisers and soaps in Q4. The company had hiked soap prices by 5%, which will drive value growth in the category; HI category has been recovering over past two quarters. Management expects demand to recover gradually by Q1FY2021 led by a good rabi crop and government efforts to boost rural consumption. This along with a recovery in demand for HI and good response to new products will help sustain volume growth at 7-9%.
Stock has corrected by ~19% from recent highs and trades at 33.7x its FY2021E and 28.5x its FY2022E earnings; we maintain a Buy on the stock with an unchanged PT of Rs. 865.
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