Godrej Consumer Products Ltd (GCPL) is one of India's leading home-grown household and personal care companies. GCPL also has presence in other countries like Indonesia, Africa, US and the Middle East. Q4FY20 revenue dropped 12.2% YoY (-11.0% CC) to Rs. 2,154cr, on lower sales volume in India amidst lockdown (-15.0% YoY). EBITDA margin contracted ~150bps to 22.1% on higher raw material and packaging costs. PAT declined 75.4% YoY to Rs. 230cr. Management suspended dividend for the quarter to conserve cash. We expect next few quarters to remain challenging owing to COVID-19.
OutlookHowever, with the rising market share for key products, new partners,channel dynamics, cost optimization efforts and current upside potential, we upgrade our rating to BUY on the stock with a revised target price of Rs. 665 based on 35x FY22E adj. EPS.
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