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Godrej Consumer
Consumer demand trends - FMCG demand remains fairly healthy despite macro
headwinds. Volume growth rates have held up well so far across three categories –
soaps, household insecticide (HHI) and hair colors and they expect this momentum
to sustain in domestic markets. Rural growth rates have been higher given GCPL is
scaling up their distribution presence in these markets.
Optimistic on growth in overseas business - GCPL is quite optimistic about growth
prospects for its overseas business (c40% of revenues) particularly Indonesia and
Africa markets. Overseas operations should benefit from sustained investments to
grow top-line in all the geographies and in Africa particularly. While near term
margins may get influenced by increased brand/distribution spends, company is
hopeful that over time margins will move up as scale benefits kick in. They also
expect synergistic gains from technology transfer across geographies.
Margins - Recent sharp rupee depreciation does not bode well for raw material costs
for GCPL (we estimate 35-40% of COGS is directly or indirectly linked to import
price parity for GCPL).However timing of the impact will depend on kind of
covers/hedges undertaken by the company. Advertising spends (9-10% of sales) will
be sustained at current levels given impending launch of new products.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Godrej Consumer
Consumer demand trends - FMCG demand remains fairly healthy despite macro
headwinds. Volume growth rates have held up well so far across three categories –
soaps, household insecticide (HHI) and hair colors and they expect this momentum
to sustain in domestic markets. Rural growth rates have been higher given GCPL is
scaling up their distribution presence in these markets.
Optimistic on growth in overseas business - GCPL is quite optimistic about growth
prospects for its overseas business (c40% of revenues) particularly Indonesia and
Africa markets. Overseas operations should benefit from sustained investments to
grow top-line in all the geographies and in Africa particularly. While near term
margins may get influenced by increased brand/distribution spends, company is
hopeful that over time margins will move up as scale benefits kick in. They also
expect synergistic gains from technology transfer across geographies.
Margins - Recent sharp rupee depreciation does not bode well for raw material costs
for GCPL (we estimate 35-40% of COGS is directly or indirectly linked to import
price parity for GCPL).However timing of the impact will depend on kind of
covers/hedges undertaken by the company. Advertising spends (9-10% of sales) will
be sustained at current levels given impending launch of new products.
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