GCPL’s Q1FY2024 performance was largely in line with expectation with expected good recovery in the domestic HI and Indonesia business. Low double digit revenue growth was largely volume-led (high single-digit volume growth in domestic business).. Gross margins and OPM are expected to improve on y-o-y basis due to lower input prices (palm oil prices are down by 40% y-o-y); PAT is likely to report an over 30% y-o-y growth. For FY2024, GCPL aims to continue its volume-led growth momentum and targets high single-digit volume growth and high teens EBITDA growth, while for the medium-long term, the company’s strategy is to invest strongly in the India business and simplify the international business. Overall, revenues and PAT expected to post a CAGR of 13% and 23% respectively over FY2023-25E.
OutlookWe retain a Buy rating on Godrej Consumer Product Ltd (GCPL) with a revised PT of Rs. 1,250. Stock trades at 47.9x/40.9x its FY24E/25E EPS. It remains preferred pick in the consumer goods space with an expected recovery in domestic HI and Indonesia business, coupled with margin expansion led by moderation in commodity inflation.
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