The shares of Godrej Consumer Products Ltd. (GCPL) slipped 5% during the early hours of trading on Thursday as the company updated on its weak September quarter results. As of 12:00 noon, the stock was trading at ₹ 851.50, down 5.03% for the day. The FMCG stock has lost over 16% in market value in the last twelve months.
The note came after the market closed on Tuesday. The markets remained closed on the account of the Dussehra festival on Wednesday.
GCPL is part of the Godrej Group and comes under the stewardship of Adi Godrej. It manufactures and markets products including soap, handwash, hair colourants, and liquid detergents. The company enjoys strong brand recognition for its portfolio of brands such as Godrej No. 1, Godrej Shikakai, Godrej Powder Hair Dye, Renew and more.
The company reported it shall post weak results on the volume and margin front for the quarter ending September (Q2FY23), following its dismal performance in Q1. Its Indian operations are expected to register the volume to drop by the mid-single digit. As for the rural demand, it remained subdued in the last quarter.
On a consolidated basis, the management of Godrej Consumer hopes to reach a sales growth of 5%. In the first quarter of FY23 ending June, it clocked revenue growth of 8% year on year.
The margins may further remain compressed because of higher input costs, increased marketing investments and lacklustre performance in Indonesia during the quarter.
However, analysts are still bullish on GCPL. Motilal Oswal Financial Services remarked, “With investments by the new CEO being focused on boosting growth in the high margin, high-return on capital employed domestic business, the company’s medium-term earnings growth outlook is strong.”
Analysts at Religare Broking have given a price target of ₹ 1,178 for the FMCG company’s shares. This results in an upside of 38% with a time horizon of twelve months.
Written by Vikalp Mishra
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