Godrej Consumer Products: 1QFY2012 Result Update |:: Angel Broking,

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Godrej Consumer (GCPL) posted mixed set of numbers for the quarter.
Consolidated top-line growth was strong at 39.6% yoy, led by recent acquisitions;
thus, this quarter’s numbers are not directly comparable to 1QFY2011 numbers.
Domestic revenue growth stood at 21% yoy, aided by full consolidation of Godrej
Household Products (GHPL). Reported earnings grew modestly by 94% yoy, aided
by high extraordinary income due to the settlement of Sara Lee JV termination.
We maintain our Accumulate rating on the stock.
Robust inorganic growth: GCPL reported strong top-line growth of 39.6% yoy to
`997.8cr, driven largely by the consolidation of recent acquisitions. Domestic
business (including GHPL’s additional 51% consolidation) registered growth of
21% yoy to `643cr. Soaps registered ~17% yoy growth and hair colour registered
growth of 19% yoy during the quarter. International business revenue stood at
`360cr, registering growth of 94% yoy. Reported earnings registered growth of
94% yoy to `239.3cr (`123.2cr).
Outlook and valuation: GCPL’s recent acquisitions have been in-line with its 3X3
strategy and enable the company to spread its footprint and grow inorganically.
At the CMP of `440, the stock is trading at 21.2x FY2013E earnings of `20.8.
We maintain an Accumulate rating on the stock with a target price of `478,
based on 23x FY2013E EPS.