Motilal Oswal's research report on Godrej Consumer
For GCPL, the improvement in sales growth trajectory is quite encouraging with the company now attaining double-digit three-year CAGR in sales. The management has maintained its double-digit sales growth guidance with mid-to-high single-digit volume growth. Material cost pressures are likely to abate markedly in 2HFY23 but higher media spends, to aid innovation and deepen penetration over the long term, will result in more gradual EBITDA margin improvement in ensuing quarters. Sales growth has improved noticeably in recent years along with renewed initiatives because of the strategic refresh to drive category growth in India, as well as expand distribution and reach in GUAM. A sales recovery in Indonesia from 2HFY23 onwards can improve the trajectory further in subsequent years. With the worst of the material cost pressures seemingly behind, FY24E earnings appear to be robust.
We maintain our BUY rating with a TP of INR1,080 (premised on 45x Jun’24E EPS).
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