MOSL: GODREJ CONSUMER (Neutral) - Results in-line - weak HI biz restricts domestic growth
GODREJ CONSUMER: Results in-line; weak HI biz restricts domestic growth
(GCPL IN, Mkt Cap USD12.0b, CMP INR1123, TP INR1155, 3% Upside, Neutral)
- GCPL' 4QFY18 consol. net sales grew 4.8% YoY to INR24.9b (est. of INR25.4b). Consol. EBITDA rose 6.4% YoY to INR5.7b (est. of INR6.0b), while adj. PAT grew 11.2% YoY to INR4.2b (est. of INR4.1b). Consol. comparable (adjusted for GST accounting effect) constant currency sales grew 3% YoY in 4QFY18, with India business reporting flat growth.
- India branded business volumes grew 6% YoY. Household Insecticides business reported a 5% YoY decline in comparable sales. Soaps sales grew 19% YoY (strong double-digit volume growth) and Hair Color sales rose 3% YoY.
- Gross margin expanded 180bp YoY to 56.2%. This, however, was partly offset by higher ad spends (+80bp YoY to 7.3%), staff costs (+40bp YoY to 11.0%) and other expenses (+30bp YoY to 17.2%), restricting EBITDA margin expansion to 40bp YoY to 22.9%.
- FY18 performance: sales grew 5.7% to INR98b, EBITDA increased 7% to INR20b (led by EBITDA margin expansion of 30bp) and adj. PAT rose 11.2% to INR14.5b.
- Balance sheet: Creditor days increased to 76 in FY18 from 55 in FY17.
- Concall highlights: 1) FY19 will be the best in terms of new launches. 2) Rural growth continues to outpace urban. 3) FY20 is expected to be a year of real recovery in the HI segment after groundwork in FY19.
Godrej Consumer Products is a consumer goods company, manufacturing and marketing Household and Personal Care products. Co. is engaged in the manufacture and sale of soaps, cosmetics and detergents. Co.'s Personal Care products include Godrej No.1 - soaps; Cinthol - soaps, deodorants, talcs and shower gels; Godrej protekt - washes, a hand sanitiser and a personal mosquito repellent spray; and Godrej expert - creme hair colour in a sachet, powder hair colour with a unique gel technology, and herbal hair colour. Co.'s home care products include Good Knight - mosquito repellents; HIT - household insecticides; Godrej aer - home and car air fresheners; and Godrej Ezee - liquid detergents.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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