Sell Godrej Consumer Products, target Rs 1,220: Elara Capital

Elara Capital has a sell call on Godrej Consumer Products with a target price of Rs 1,220.

The current market price of Godrej Consumer Products is Rs 1,384.45.

Time period given by the brokerage is one year when Godrej Consumer Products price can reach the defined target.

"We estimate GCPL to report 11 per cent/15 per cent sales/profit growth respectively in FY18-21e period led by 1) high single digit volume growth led by India and Indonesia through reach expansion 2) 35-40 per cent of the growth to be contributed through new product launches as they have dialed up the intensity 3) premiumisation across countries to improve operating margins 4) more automation of plants to reduce labor costs over time. We re-rate the stock to 1-yr fwd P/E multiple of 40x (Earlier: 36x) due to recovery in both intrinsic and extrinsic factors for GCPL and due to its brand strength to recover from price led competitive pressures. We arrive at revised target price of Rs 1,220 (Exit PE multiple of 40x on Sept’20 EPS of INR 31) and change our rating to SELL from Reduce on the stock," Elara Capital said in a report.