Sharekhan's research report on Godrej Consumer Products
GCPL is expected to achieve double-digit revenue growth in Q4FY2023 with good recovery in the domestic household insecticide (HI) category and good recovery in the Indonesia business. Gross margin and OPM are expected to improve on y-o-y basis due to lower input prices (palm oil prices are down by 36% y-o-y); OPM is expected to be around 18.0-18.5% in Q4. Key medium-term growth drivers for double digit revenue and earnings growth are 1) recovery in the domestic HI business 2) Indonesia business growing consistently and 3) Africa business growing in double digits.
Outlook
We re-iterate our Buy rating on Godrej Consumer Products (GCPL) with revised PT of Rs. 1,100. Improving growth prospects in key markets and discounted valuations against peers at 44.1x/37.5x its FY24E/25E EPS makes it’s a good pick in the consumer goods space.
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