Buy Godrej Consumer; target Rs 1019: Maximus Securities
Maximus Securities is bullish on Godrej Consumer Products and has recommended buy rating on the stock with a target price of Rs 1,019 in its July 08, 2013 research report.
July 09, 2013 / 14:55 IST
Maximus Securities' research report on Godrej Consumer Products
On yearly basis for FY13, company reports resilient top line numbers from Rs. 4,851 crs to Rs. 6,391 crs (up 32 percent yoy) on back of new product launches, distribution expansion inspite of price hikes during the year.On CAGR basis for FY09-13, company's top line and bottom line numbers has grown 25 percent. We expect the company to sustain these valuations on the back of robust 23 percent expected earnings CAGR for FY11-15.According to the management, the company will double innovation rate in next 3 years. It also plans to accelerate pace of innovation in India with new product launches which will enhance their margins.Godrej's international business grew by 49 percent in this quarter (28 percent of organic growth) majorly led by Megasari and other acquisitionsDuring the year, the company acquired 'Soft and Gentle' a women's deodorant brand from Colgate - Palmolive for an undisclosed sum through its UK subsidiary Keyline brands. This would add up 10-15 percent to their personal care profile hence forth.Over the years the company has shifted its dependence in its flagship product Godrej soaps and ventured into other segments to increase their profitability and market share in other segments. In FY09 the portfolio consisted of soaps (68 percent), hair colour (32 percent). In FY2012 it was soaps (36 percent),
Hair colour (19 percent), Insecticides (45 percent).Valuations: "We expect the company to post robust financials and report above industry growth in domestic markets through continuous innovations, new product launches and increased investments in advertisements and promotions. We think the stock is fairly undervalued at this levels and it may have further positive upside. We rate a buy on the stock with the target price of Rs 1,019 (33x FY14E)," says Maximus Securities research report.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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