Sharekhan's research report on Godrej Consumer Products
Demand stayed buoyant in January-February unaffected by local lockdowns and supply disruptions; Q4FY21 will see yet another quarter of double-digit revenue growth; rise in input costs will be mitigated by efficiencies and by leveraging upon higher margins in other geographies. Key long term triggers for GCPL’s India business 1) Improving penetration of Hand wash and emerging categories such as floor cleaners/toilet cleaners 2) Improving penetration of HI in rural markets through new product launches and rising caution amongst consumer and 3) market share gains in core categories such as soaps and hair colour. Globally, Indonesia would recover strongly in FY22; company focusing on achieving profitable growth in LatAm and new leadership is eyeing sustainable revenue growth with margins improving to 17-18% in medium term.
GCPL is set to achieve CAGR growth of 10% and 17% in revenue and PAT over FY2020-23. Stock trades at 30x its FY2023E EPS, at a discount to historical valuations. We maintain Buy with an unchanged price target of Rs. 850.
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