Buy Godrej Consumer; target of Rs 1225: Firstcall Research

Firstcall Research's report on Godrej Consumer Products

"Consolidated Net sales for the quarter rose by 12.79% to Rs. 22357.1 mn from Rs. 19822.7 mn in Q3 FY14. India business grew by 12%; nearly 1.6x of the overall household and personal care sector (HPC) growth and International business grew by 20% on an organic constant currency basis. Q3 FY15 consolidated EBITDA increased by 26.81% to Rs. 4119.40 mn as against Rs. 3248.60 mn in the corresponding period of the previous year, driven by a strong growth of 18% in the India business and 43% in the international business. The net profit grew strongly this quarter at 34.63% and stood at Rs. 2635.7 mn as compared Rs. 1957.7 mn in Q3 FY14. In January 2015, GCPL entered into an agreement with Frika Hair (Pty) Limited, for the acquisition of 100% equity stake in its hair extensions business in South Africa."

"After a few quarters of sluggish growth, consumer demand in India started to show early signs of a recovery in the third quarter of FY2015. The company has delivered strong, competitive double-digit growth across categories. After a challenging few quarters, the growth prospects of the Indian economy are looking more favourable. GCPL expects growth in the second half of this fiscal year should be better than the first half. Consequently, GCPL intent is to deliver a stronger performance overall this year, compared to the previous year. The medium and long-term growth prospects in India and GCPL other emerging markets remain robust. With the company clear strategic focus, differentiated product portfolio, superior execution and top-notch team, it will continue to deliver industry leading results in the future. Hence, we recommend ‘BUY’ for ‘Godrej Consumer Products Ltd’ with a target price of Rs 1225 for medium to long term investment", says Firstcall Research Report.

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