Motilal Oswal's research report on Godrej ConsumerGodrej Consumer’s (GCPL) 3QFY16 results were in-line with consol. net sales growth of 5.7% YoY to INR23.5b (est. INR24.7b), EBITDA growth of 17.2% YoY to INR4.6b (est. INR4.7b) and Adj. PAT growth of 22.7% YoY to INR3.2b (est. 3.3b). Consol. organic constant currency sales posted 9% growth led by 9% growth in International and 8% growth in Domestic business. We revise our estimates downwards by 2-3% to bake in 3Q16 revenue miss and model for 12.7% revenue CAGR over FY15-18E with gradual recovery in the International business. GCPL will be a big beneficiary of benign raw material environment (~40% of RM in HI are plastics/plastic derivatives), in our view. At 28.8x FY17E and 25.2x FY18E EPS, the stock trades at a discount to the sector. Exposure to various geographies, with attendant currency risks and relatively lower RoE (mid-20’s) justify the discount, in our view. Maintain Neutral with a target price of INR1,300 (28x FY18E Adj. EPS).
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