Buy Godrej Consumer; target of Rs 1270:Sharekhan

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26 Aug, 2025 12:21

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Sharekhan's reserach report on Godrej ConsumerThe torrential rains in the southern India and flood in Chennai are unlikely to have any significant effect on the operating performance of GCPL. However, the abnormal rains in southern India are likely to push the sales of household insecticide products in the coming months. With no change in the demand environment, the revenue growth will remain in line with earlier quarters. However, the management expects the growth across various domestic segments to stay ahead of category growth on the back of strong product portfolio and extensive promotional offerings. On the international front, Latin American (Q3 strong quarter for business) and African businesses will continue to post a double-digit revenue growth and better margins in H2. Overall, the operating profit margins are expected to remain high due to benign input cost price. Thus, the PAT growth is expected to stay ahead of revenue growth in the coming quarters.With innovations remaining core of the business strategy and focus on enhancing distribution reach from the current 4.5 million outlets (project ‘Rural one’ and ‘Project E-cube’ are in the pilot phase and will expand reach in near term), GCPL is well-poised to achieve a revenue and PAT growth of 16% and 22% respectively over FY2015-18. The presence in emerging markets (Latin America and Africa) will support the overall earnings growth in the long run. Thus, we have retained GCPL as one of our top picks in the mid-cap FMCG space. We have also maintained our Buy recommendation on the stock with an unchanged price target of Rs1,460.

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