The shares of the multinational consumer goods company gained up to 1 percent after a well-known brokerage recommended a ‘Buy’ rating.
With a market capitalization of Rs 1.28 lakh crore, the shares of Godrej Consumer Products Ltd closed at Rs 1,257.00 apiece, decreased around 1.20 percent as compared to the previous closing of Rs 1,272.05 apiece.
Looking into Godrej Consumer Products Ltd’s performance, revenue increased by 2 percent from Rs 3,599 crore in Q3 FY23 to Rs 3,660 crore in Q3 FY24. During the same period, net profit increased by 6 percent, from Rs 546 crore to Rs 581 crore.
Motilal Oswal, one of the well-known brokerages in India, gave a ‘Buy’ call on the consumer durable stock with a target price of Rs 1,500, indicating a potential upside of 20 percent from Monday’s closing price of Rs 1,257 per share.
Here is a reason for the probable upward target:
● GCPL is accelerating growth through new verticals such as expanding the TAM for Home Insecticides (HI), launching liquid detergent for the mass market, and acquiring RCCL. In 9MFY24, GCP L’s volume and EBITDA growth stood at 6% and 24%, respectively
● GCPL has achieved significant cost reductions, particularly in RCCL’s overhead costs, which have seen a sharp decline of 65-70%. This operational efficiency has contributed to an improved EBITDA margin of 18-20%, a substantial increase from the pre-acquisition margin of 7-9% for RCCL.
● GCPL strategically reinvested in advertising for RCCL despite overall cost reduction. The focus is on enhancing brand visibility and market presence, contributing to margin improvement. The company aims to reach a target margin band of 25-26% through operational leverage and cost synergies.
● GCPL has entered the Rs 1.2b anti-mosquito incense sticks market, where illegal sellers currently hold a major portion. Goodnight Agarbatti is the only government-approved anti-mosquito incense stick in India.
● GCP L’s longstanding partnership with a manufacturer deeply rooted in the HI sector for over 25 years has secured exclusivity on Renofluthrin (RNF) in India for the foreseeable future. The company plans to roll out the RNF molecule for other HI products as well.
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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