Buy Godrej Consumer; target of Rs 1450: Motilal Oswal

Motilal Oswal's research report on Godrej Consumer

Godrej Consumer (GCPL)’s FY25 strategy focused on 1) expanding the existing categories by innovating products across various sizes and price points while broadening distribution to enhance consumer reach, 2) streamlining operations through radical simplification by reducing SKUs, personnel, and processes, and 3) prioritizing sustainability and social responsibility alongside profitability, under the principle of "People and Planet alongside Profit". Going ahead, GCPL will continue focusing on 1) premiumization, which involves launching premium innovations, entering new premium categories, and expanding premium channels; 2) efficiency improvement, in which GCPL plans to enhance efficiency by investing in manufacturing capabilities and brands; and 3) affordability in rural markets, in which the company aims to drive growth in rural areas by introducing access packs to cater to price-sensitive consumers.

Outlook

We expect the company to deliver a sales/EBITDA/Adj. PAT CAGR of 12%/13%/19% over FY25-28. The stock currently trades at 57x and 47x P/E on FY26E and FY27E, respectively. We reiterate our BUY rating on the stock with a TP of INR1,450.

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