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MOSL: Godrej Consumer (Neutral) - Improving India business outlook augurs well for growth

Godrej Consumer: Improving India business outlook augurs well for growth

(GCPL IN, Mkt Cap USD11.7b, CMP INR1093, TP INR1155, 6% Upside, Neutral)

 

We attended Godrej Consumer’s (GCPL) annual analyst meet. Key takeaways:

• Heading into FY19, the India business growth outlook appears sanguine, with 10 new products scheduled for launch during the year, the India Meteorological Department’s (IMD) forecast of a normal monsoon, the likely absence of external disruptions (unlike the past two years), the technological benefits, and higher feet on street in middle India (towns with population between 50,000 and 1 million).
• The company has identified a few key priorities for FY19 in its main geographies: (a) In India, GCPL expects superior growth in its core businesses and ramp-up in new products (new product development, or NPD, proportion of sales likely to reach 25% over the next few years v/s 8-9% in FY18). (b) In Indonesia, it aims to get back to double-digit sales growth by employing a better go-to-market strategy and fostering innovation. (c) In Africa, the company targets high-teens growth and improved EBITDA margin/RoCE. It aims to significantly scale up its wet haircare portfolio in this market. Full control of all operations will be an added benefit.