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Robust earnings growth
Godrej Consumer’s reported earnings growth numbers continue to
benefit from the M&A impact and are in line with estimates. Home care
segment which accounts for 46% revenues was the key performer with a
17% revenue growth. International business (incl Megasari) now
contributes 7% to GCPL’s consol net profits. Smart hedging decisions on
palm oil have helped the company and it awaits more palm oil corrections
to extend / restore the forward cover. We continue to like the stock as
the 20% earnings cagr adequately supports the 23x PE multiple.
Operating results in line with expected
Godrej Consumer’s 4QFY11 consolidated earnings grew by 54% YoY to
Rs1.42bn – ahead of expectations largely due to the higher other income. The
other income includes nearly Rs130m of interest on advances given to the
ESOP trust, half of which is non-recurring. Ebitda level performance was in
line with expectations.
Net revenue growth trend improves
Reported net revenues jumped 96% YoY – nearly 20 ppts higher than that
seen in the previous two quarters largely attributable to the improved
performance in the standalone entity. Soap business convincingly reversed
the negative trend with 4Q revenue growth of 13% vis-à-vis -5% in the first
9m. Growth has been largely volume driven. Hair colour business growth also
improved to 18% YoY. Growth in household insecticides moderated marginally
to 17%, however, the value market share inched up 2 ppts to 40% during 4Q.
Domestic ebitda down YoY; couched by merger impact
On a like to like basis, the domestic business ebitda declined an estimated
15% YoY despite a 380 savings in A&P expenditure. The company has
benefitted due to smart forward positions in the volatile palm oil and has run
down the forward cover from 8/9 months in mid 2010 to 3 months now. The
4% weighted soap business price hike in Jan’11 has also helped. While more
soap price hike is now due, the company has delayed the same due to
competitive environment and high inflation impacting consumer sentiments.
Higher working capital / capex impacts debt reduction
As of Mar-11, GCPL carries a net debt of Rs18bn – nearly unchanged from the
June-2010 post acquisition levels. This comes as a negative surprise and is
driven by the higher working capital requirement in the domestic and the
international business and also due to capex in Indonesia.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Robust earnings growth
Godrej Consumer’s reported earnings growth numbers continue to
benefit from the M&A impact and are in line with estimates. Home care
segment which accounts for 46% revenues was the key performer with a
17% revenue growth. International business (incl Megasari) now
contributes 7% to GCPL’s consol net profits. Smart hedging decisions on
palm oil have helped the company and it awaits more palm oil corrections
to extend / restore the forward cover. We continue to like the stock as
the 20% earnings cagr adequately supports the 23x PE multiple.
Operating results in line with expected
Godrej Consumer’s 4QFY11 consolidated earnings grew by 54% YoY to
Rs1.42bn – ahead of expectations largely due to the higher other income. The
other income includes nearly Rs130m of interest on advances given to the
ESOP trust, half of which is non-recurring. Ebitda level performance was in
line with expectations.
Net revenue growth trend improves
Reported net revenues jumped 96% YoY – nearly 20 ppts higher than that
seen in the previous two quarters largely attributable to the improved
performance in the standalone entity. Soap business convincingly reversed
the negative trend with 4Q revenue growth of 13% vis-à-vis -5% in the first
9m. Growth has been largely volume driven. Hair colour business growth also
improved to 18% YoY. Growth in household insecticides moderated marginally
to 17%, however, the value market share inched up 2 ppts to 40% during 4Q.
Domestic ebitda down YoY; couched by merger impact
On a like to like basis, the domestic business ebitda declined an estimated
15% YoY despite a 380 savings in A&P expenditure. The company has
benefitted due to smart forward positions in the volatile palm oil and has run
down the forward cover from 8/9 months in mid 2010 to 3 months now. The
4% weighted soap business price hike in Jan’11 has also helped. While more
soap price hike is now due, the company has delayed the same due to
competitive environment and high inflation impacting consumer sentiments.
Higher working capital / capex impacts debt reduction
As of Mar-11, GCPL carries a net debt of Rs18bn – nearly unchanged from the
June-2010 post acquisition levels. This comes as a negative surprise and is
driven by the higher working capital requirement in the domestic and the
international business and also due to capex in Indonesia.
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