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TP : Rs 474
Investment Rationale
§ Faster growing household insecticide segment (category growth of 20%+) will continue to strengthen its
domestic business of soaps and hair colours, which is likely to witness an improving growth outlook. We expect
domestic business to register 15% CAGR growth over FY11-13E.
§ Increasing presence in international geographies of Indonesia, LatAM and Africa will assist future growth
momentum. International revenue size at Rs 3.6bn for 1QFY12 is considerable and is expected to continue a
healthy growth trajectory in future.
§ Moreover, increasing contribution from household insecticide segment, with modest inflationary input costs
scenario and better margin profile, will likely aid better profitability going forward. We expect operating margins to
increase to 18.1% (up 90bps from FY11) and PAT to grow at 29% CAGR over FY11-13E.
Valuations
§ Valuations at 17.3x FY13E EPS of Rs 23.7/share look reasonable.
§ GCPL is the only stock in the consumers’ space which is providing c12% absolute upside potential from current
levels. Moreover, on a relative basis also, GCPL has under performed its peers in the recent times.
§ Attractive valuations, coupled with robust growth drivers place GCPL in a preferred position and hence, we
maintain our ACCUMULATE rating with a target price of Rs 474/share.
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