Reduce Godrej Consumers; target of Rs 663: HDFC Securities

HDFC Securities' research report on Godrej Consumers

GCPL’s 2QFY21 was healthy with revenue/EBITDA growth of 11/19% YoY (HSIE 11/12%). Domestic revenue/EBITDA grew by 11/17% YoY, while International revenue/EBITDA grew by 11/24% YoY. Domestic volume growth was at 5%, with market share gain. Secondary growth was ahead of primary growth for HI and Soaps, reflecting healthy demand at the consumer level. Hair colours witnessed sequential recovery, but overall demand remained muted during the quarter. Indonesia and LATAM led the International margin expansion. We expect healthy performance in 2HFY21, driven by demand and margin recovery in international business. We increase our EPS estimates for FY21/FY22/FY23 by 5/3/2%.

Outlook

We roll forward our target price to Sep-22E EPS and value GCPL at 35x P/E to derive a target price of Rs 663. Maintain REDUCE.

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