GCPL’s net sales and EBITDA came in line while APAT was ahead of our estimates. The company has reported 3% volume growth in the domestic market. 85% of the company’s portfolio, related to health, hygiene and value for money, delivered 9% sales growth during Q1. HI category posted 27% growth, was a positive surprise, especially considering lockdown in the initial phase of the quarter. We have maintained our FY21E and FY22E EPS at Rs 15.4 and Rs 17.3, respectively. We believe that the discretionary categories would take longer to recover compared to essential, hence hair colors would witness demand challenges, going ahead.
OutlookWe value GCPL at 40x FY22E earnings to arrive at a TP of Rs 699. Considering sharp run-up in stock price, we see limited room for further upside. Maintain Reduce. (Buy on Dips).
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