Buy Godrej Consumer Products, target Rs 1265: Edelweiss Financial Services
Buy Godrej Consumer Products Ltd. at a price target of Rs 1265.
By ETMarkets.com | Updated:
Edelweiss Financial Services has a buy call on Godrej Consumer Products Ltd. with a target price of Rs 1265. The current market price of Godrej Consumer Products Ltd. is Rs 1094.1.
The time period given by the brokerage is a year when Godrej Consumer Products Ltd. price can reach defined target. Godrej Consumer Products Ltd., incorporated in the year 2000, is a large-cap company with a market cap of Rs 76516.71 crore.
Investment rationale by Edelweiss
Godrej Consumer Products’ (GCPL) Q4FY18 consolidated revenue, EBITDA and PAT growth of 5.8%, 9.4% and 10.0% YoY, respectively, came in line with our estimates. Domestic volume growth was soft at 6% YoY, an outcome of 5% YoY revenue decline in HI segment and 3% YoY revenue growth for hair care segment (against run‐rate of 14% over last 4 quarters). IB logged constant currency (CCY) growth of 6% YoY with Indonesia (‐6% CCY) and Africa (7% CCY) both on slightly weaker footing. To support new launches, ad spends expanded 70bps YoY, a right strategy in our view. Going ahead, we believe the building blocks are in place in terms of innovation and new launches pipeline, which will bolster the company’s positioning and spur market share gains too. Maintain ‘BUY’.
Outlook and valuations: Positive; maintain ‘BUY’We like GCPL’s sharp focus on innovation and cost efficiency. Going ahead, good performance by domestic business and growth in Africa are structural levers. We retainour target multiple of 40x FY20E EPS to arrive at our revised TP of INR1,265.
The time period given by the brokerage is a year when Godrej Consumer Products Ltd. price can reach defined target. Godrej Consumer Products Ltd., incorporated in the year 2000, is a large-cap company with a market cap of Rs 76516.71 crore.
Investment rationale by Edelweiss
Godrej Consumer Products’ (GCPL) Q4FY18 consolidated revenue, EBITDA and PAT growth of 5.8%, 9.4% and 10.0% YoY, respectively, came in line with our estimates. Domestic volume growth was soft at 6% YoY, an outcome of 5% YoY revenue decline in HI segment and 3% YoY revenue growth for hair care segment (against run‐rate of 14% over last 4 quarters). IB logged constant currency (CCY) growth of 6% YoY with Indonesia (‐6% CCY) and Africa (7% CCY) both on slightly weaker footing. To support new launches, ad spends expanded 70bps YoY, a right strategy in our view. Going ahead, we believe the building blocks are in place in terms of innovation and new launches pipeline, which will bolster the company’s positioning and spur market share gains too. Maintain ‘BUY’.
Outlook and valuations: Positive; maintain ‘BUY’We like GCPL’s sharp focus on innovation and cost efficiency. Going ahead, good performance by domestic business and growth in Africa are structural levers. We retainour target multiple of 40x FY20E EPS to arrive at our revised TP of INR1,265.
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