EUR 120.00 For Business Accounts Only

MOSL: Morning India (31/August/21): 1. Godrej Consumer (Performance trending ahead of expectations); 2. Bharti Airtel (Building war chest for upcoming growth opportunities); 3. Automobiles (Realigning MOdel Por

MOrning India (31/August/21): 1. Godrej Consumer (Performance trending ahead of expectations); 2. Bharti Airtel (Building war chest for upcoming growth opportunities); 3. Automobiles (Realigning MOdel Portfolio as new headwinds emerge)

 

Today’s top research idea

Godrej Consumer: Performance trending ahead of expectations; promising outlook

• Even before the new CEO has taken over (in Oct'21), GCPL has been performing consistently well in various large categories over the past year. Household Insecticides (HI) and Soaps posted a double-digit two-year CAGR during 1QFY22.
• 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.
• There is still possibility of significant improvements in ROCEs with a) the sales momentum picking up further under the new CEO, b) increase in the contribution of the higher margin, higher ROCE domestic business to sales, and c) continued efforts to boost margins and ROCEs in the international business.
• Maintain Buy, with TP of INR1,250 (45x Dec'23 EPS).

Piping hot news

Economists project GDP growth at 14%-23% in Q1FY22

Economists have pegged economic growth in the range of 14 per cent to 23 per cent for the first quarter of the current financial year. The growth was projected on a low base of 24.4 per cent contraction in the gross domestic product in Q4 of the previous financial year. This implies that economic growth has to be more than 24.4 per cent in order for the GDP at constant price in Q1 of FY'22 to equal that of FY'20. The projections fall short of that number. The data will be released on Tuesday.