Nomura has maintained its 'Buy' rating on Godrej Consumer

MUMBAI : Nomura has maintained its 'Buy' rating on Godrej Consumer (GCPL) and set target a target price of Rs 800 on the back of increases in their earnings forecasts as well as P/E multiples. GCPL has delivered strong operational performances both on the domestic and international front over the past couple of years, according to them.

Nomura analysts expect this performance to continue in the medium term, with management focused on delivering volume growth ahead of industry. International business is now a substantial part of the portfolio, where the inorganic route has worked well for GCPL.

"We now value GCPL in line with the sector average, as we believe consistent delivery should be rewarded with higher valuations" said a report by Normura. Softening commodity prices will have a positive impact on profitability for GCPL. The impact in 1QFY13 was minimal, but 2Q gross margin performance to pick up. "In the medium term, we believe there are significant cross-pollination opportunities for the company to take parts of the product portfolio to different geographies" the report added.

GCPL trades at 23.3x FY14F EPS GCPL trades at 23.3x FY14F EPS, which is lower than the sector average. As company continues to deliver on its promise of strong performance in international business, valuations will continue to move ahead in the near term. "We believe GCPL is one the best-placed companies in the mid-cap space within the consumer sector, offering investors exposure to a diversified portfolio mix across geographies" according to Nomura.