MOSL: GODREJ CONSUMER (Neutral)-General slowdown, delayed summer impact India biz
Godrej Consumer: General slowdown, delayed summer impact India biz
(GCPL IN, Mkt Cap USD9.5b, CMP INR642, TP INR650, 1% Upside, Neutral)
- net sales declined 3.1% YoY to INR24.5b (our estimate: INR26.4b) in 4QFY19. Consol. EBITDA was down 4.2% YoY to INR5.8b (our estimate: INR6.1b). Net profit excluding exceptions and one-off items stood at INR4b (according to the press release). Consol. comparable (adjusted for Europe business divestment and excluding one-offs) CC sales grew 4% YoY in 4QFY19, with the India business staying flat.
- India branded business volumes grew by just 1% YoY. Soaps sales and Household Insecticides sales declined 1% YoY and 6% YoY respectively while Hair color sales increased 7% YoY. Management attributed the subdued performance to general slowdown and delayed summer.
- gross margin shrank 30bp YoY to 58.7%. Lower ad spends as a percentage of sales (-80bp YoY to 6.4%) were offset by higher staff costs (+20bp YoY to 11%) and other expenses (+60bp YoY). Consequently, the EBITDA margin contracted 30bp YoY to 23.6% (our estimate: 23.2%).
- FY19 consol. performance: Sales, EBITDA and adj. PAT grew 4.7%, 4.1% and 7%, respectively. EBITDA margin shrank 50bp to 20.5%.
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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