Reduce Godrej Consumers; target of Rs 628: HDFC Securities

HDFC Securities' research report on Godrej Consumers

GCPL’s 1QFY21 was broadly in line with revenue/EBITDA growth of -1/3% YoY. Domestic revenue/EBITDA growth was at +5/+22% YoY, while international revenue/EBITDA growth was -8/-36% YoY. Domestic revenue growth was led by HI (27% YoY), while soaps surprised with a 2% YoY decline (HSIE +7%). Hair colours remained weak and declined by 18% YoY. Within international, GUAM was heavily impacted (-23% YoY) by lockdowns while Indonesia maintained a healthy pace (+5% YoY), driven by HI. GCPL continued to drive penetration through innovative launches, and the company launched 45 new products in its hygiene portfolio. We expect HI and hygiene portfolio to sustain healthy growth while discretionary/OOH will be muted in FY21. We maintain our EPS estimates for FY21/FY22/FY23.

Outlook