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Buy Godrej Consumer Products: target of Rs 1249: Sharekhan

Sharekhan is bullish on Godrej Consumer Products has recommended buy rating on the stock with a target price of Rs 1249 in its research report dated September 27, 2021.

September 29, 2021 / 02:02 PM IST
HDFC Securities research report's outlook and valuations:  500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."" title="HDFC Securities research report's outlook and valuations:  "The YTD EPS upgrades (consensus) have been led by mid-tiers such as Tata Elxis, Mindtree, Mastek, and Persistent Systems, ranging from 20-40 percent and, within tier 1, by Wipro (~15%). We expect the sector (coverage universe) to post 13 percent and 14.5 percent USD revenue/APAT CAGR over FY21-24E compared to 6.5/7.5 percent over the past five years. The mid-tier valuation premium relative to tier 1s may sustain, based on its relative outperformance (>500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."" width="100%" height="auto" >

HDFC Securities research report's outlook and valuations:  "The YTD EPS upgrades (consensus) have been led by mid-tiers such as Tata Elxis, Mindtree, Mastek, and Persistent Systems, ranging from 20-40 percent and, within tier 1, by Wipro (~15%). We expect the sector (coverage universe) to post 13 percent and 14.5 percent USD revenue/APAT CAGR over FY21-24E compared to 6.5/7.5 percent over the past five years. The mid-tier valuation premium relative to tier 1s may sustain, based on its relative outperformance (>500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."

 
 
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Sharekhan's research report on Godrej Consumer Products


The company is focusing on growth levers such as 1) improving penetration of aerosols/liquid vapourisers in household insecticide (HI); 2) regaining lost market share in wet-wipes through competitive pricing; and 3) gaining scale in hygiene to drive double-digit revenue growth in Indonesia. India business is expected to grow in double digits with all key categories (including soaps and HI) expected to report double-digit revenue growth in FY2022. Raw-material inflation will continue to put pressure on margins in the near term. Calibrated price hikes and operating efficiencies would help in mitigating cost pressures.



Outlook


We maintain Buy on Godrej Consumer Products Limited (GCPL) with the revised PT of Rs. 1,249. The stock is currently trading at 44x/39x its FY2023E/FY2024E EPS, discount to some of the large peers.


For all recommendations report, click here


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first published: Sep 29, 2021 02:02 pm

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