MOSL: GODREJ CONSUMER (Neutral)-Top-line trajectory – a concern, valuations fair
Godrej Consumer: Top-line trajectory – a concern, valuations fair
(GCPL IN, Mkt Cap USD10.7b, CMP INR742, TP INR700, 6% Downside, Neutral)
- GCPL's consol. net sales declined 1.1% YoY to INR26.3b (our estimate: INR28.5b) in 2QFY20. Consol. EBITDA increased 7.1% YoY to INR5.8b (our estimate: INR6.2b), PBT grew 8% YoY to INR5b (our estimate: INR5.4b), while adj. PAT was up 16.2% YoY to INR4.2b (our estimate: INR4.1b) led by a lower-than-expected tax rate of 16%.
- India branded biz volumes grew 7% YoY, led by product launches, effective marketing campaigns and consumer offers. Soaps sales declined 4% YoY, Household Insecticides (HI) sales rose 4%, while Hair Color sales grew 1% YoY.
- gross margin expanded 180bp YoY to 56.6%. Lower ad spends (-150bp YoY) were offset by higher staff costs (+90bp YoY) and other expenses (+80bp YoY). EBITDA margin thus expanded at a lower rate of 170bp YoY to 21.9%.
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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