Godrej Consumer shares tumble nearly 5% as Q1 standalone PAT falls 6% YoY. Brokerages remain positive

Shares of Godrej Consumer Products (GCPL) fell 4.5% to its day’s low of Rs 1,433 on BSE on Thursday after the company reported a 5.8% year-on-year (YoY) fall in standalone net profit to Rs 367.84 crore for the June quarter, following which the brokerages still remain positive on the stock, raising target prices up to Rs 1,715.

However, the revenue increased by 7.9% to Rs 2,162.93 crore in the period under review. Additionally, GCPL also announced its entry into the pet care segment with an investment of Rs 500 crore over a period of five years.

GCPL's consolidated net profit jumped 41.4% YoY to Rs 450.69 crore. The company said that consolidated net profit without exceptional items and one-offs grew by 14% YoY, while EBITDA grew by 13%.

Here is what analysts from various brokerages say on the update:

Nuvama: Buy | Target price: Rs 1,715

Analysts at Nuvama stated that they liked GCPL’s approach towards working on expanding its TAM and launching disruptive products which would gradually rack up volumes and profitability.

InCred Equities: Add | Target price: Rs 1,665

GCPL’s focus on TAM expansion, premiumization and simplification of business are in the right direction. The company showed a healthy volume growth delivery considering demand conditions and the international business (IBD) margin improved despite muted growth. The organic foray into pet care should also aid in the gradual TAM expansion.

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ICICI Securities: Add| Target price: Rs 1,650

The Q1FY25 performance was largely in line with the estimates. Within India, it had strong performance in fast-growing categories while legacy portfolio of soaps, HI and hair colour had a subdued quarter. RCCL brands (Park Avenue and KamaSutra) maintained its quarterly revenue run rate of Rs 150 crore and is on track to deliver double-digit revenue growth in FY25. ICICI Securities likes the continued focus on innovation with the launch of new LV with 2x efficacious molecule, which is likely to drive market share gains.

Investec: Buy| Target price: Rs 1,531

Investec has maintained a buy view on the company and hiked the target price to Rs 1531 from Rs 1431.

It was a modest quarter but structurally intact. Solid volume growth in India and consolidated EBITDA margin delivery were the bright spots in Q1.Efforts to increase addressable market, innovation and delivering on international margin were seen as positives. The company continues to have the highest EPS CAGR among large cap FMCG coverage universe.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)