MOSL: GODREJ CONSUMER (Buy)-Performance trending ahead of expectations; promising outlook
GODREJ CONSUMER: Performance trending ahead of expectations; promising outlook
(GCPL IN, Mkt Cap USD15.2b, CMP INR1087, TP INR1250, 15% Upside, Buy)
- Even before the new CEO has taken over, likely in Oct’21, GCPL has been performing consistently well in various large categories over the past year. As highlighted in , both key domestic categories of Household Insecticides (HI) and Soaps posted a double-digit two-year CAGR during the quarter.
- The sales momentum is also leading to increased asset turns. Consequently, ROCE seems poised to cross 20% levels for the first time in a decade, after languishing in the mid-teens for most of this period.
- The outlook remains promising, with the possibility of significant improvements. ROCEs could improve further in case of a) the sales momentum picking up further under the new CEO, b) a further increase in the contribution of the higher margin, higher ROCE domestic business to sales (nearly 2x higher margins in domestic v/s international business), and c) continued efforts to boost margins and ROCEs in the international business.
- Maintain Buy, with TP of INR1,250 (45x Dec’23 EPS).
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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