The Fast-Moving Consumer Goods (FMCG) sector in India is the fourth largest segment of the economy, valued at $230.14 billion in 2023. This sector encompasses a diverse range of products, including food, beverages, and personal care items, with 50% of sales coming from household and personal care goods. The industry is projected to grow at a CAGR of 27.9% through 2030.
With a market capitalization of Rs 1.13 lakh crore, the shares of Godrej Consumer Products Limited were trading at Rs 1,107.65 per share, decreasing around 0.26 percent as compared to the previous closing price of Rs 1,110.55 apiece.
Brokerage Reccomdation:-
JPMorgan, one of the well-known brokerages globally, gave a ‘Buy’ call on the FMCG stock with a target price of Rs 1,365 apiece, indicating a potential upside of 23 percent from Tuesday’s price of Rs 1,107.65 per share.
Brokerage Rational:-
JPMorgan feels that the rapid sell-off has made the stock’s risk-reward ratio more acceptable and that GCPL will outperform its rivals in the future. In an investor call, GCPL’s CFO stated that 85% to 90% of the volume deceleration was attributable to cyclical causes and did not indicate structural demand difficulties or a general slowing in consumption.
Moreover, GCPL expects volumes of the soap business to return to normative levels over the next two quarters. The recovery is subject to no further increase in the prices of crude palm oil.
Financial performance:-
Examine the company’s financial condition, revenue zoomed by 29 percent from Rs 3,602 crore in Q2FY24 to Rs 3,666 crore in Q2FY25, and during the same time frame, net profit magnified by 11 percent from Rs 433 crore to Rs 491 crore.
Ratio analysis:-
The company’s critical ratios show that the return on equity decreased from 12.34 percent in FY22-23 to (4.44) percent in FY23-24, while the return on capital employed increased from 16.62 percent to 23.02 percent. The net profit margin (NPM) for fiscal year 23-24 is (3.97) percent.
Shareholding pattern:-
In the company’s recent shareholding pattern, the Promoters of the company own 63.00 percent while Retail shareholders own a 5.36 percent stake in the company and Foreign Institutional Investors own a 22.03 percent stake.
Company Snapshot:-
Godrej Consumer Products Limited is an Indian fast-moving consumer products firm. It specializes in the manufacture and marketing of household and personal care goods. The company operates in four geographical segments: India, Indonesia, Africa, and others.
Written by:- Abhishek Singh
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