Quant Pick - Godrej Consumer Products: ICICI Direct

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ICICI Direct's research report on Godrej Consumer Products

Recommendation

Buy Godrej Consumer Products in range of Rs 685-700, Target: Rs 815, Stop Loss: Rs 625 ,Time frame: Three months.

Derivatives & Quantitative Outlook

The current rally in the index has seen broad market participation with banking and auto stocks outperforming significantly. In the past couple of weeks, underperforming sectors like NBFC and PSUs saw a decent recovery whereas major FMCG stocks underperformed the index. Stocks like Godrej Consumer Products, which have remained largely range bound in the last couple of weeks, are likely to see fresh momentum in the coming weeks.

The open interest in Godrej Consumer Products has declined significantly amid the resilience shown by the stock. The stock had made a high of Rs 750 in January 2020. After eight months, it has again reached these levels. In the last month, profit booking was seen from Rs 750. It has been declining. However, since mid-October 2020, shorts have been continuously reducing, indicating lower rollover of short positions. In view of the recovery in FMCG space, we expect fresh longs to be formed in the stock. This should take the stock higher.

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