Godrej Consumer Products - Core Business Delivers Distinguished Show; Result Update Q4FY15 ::Edelweiss

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Godrej Consumer Products: International business surprises; domestic weak ::Kotak Sec, report

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International business surprises; domestic weak. GCPL reported 6% and 8% outperformance in consolidated revenues and EBITDA respectively on the back of solid outperformance in the international business. However, domestic performance, both on revenues and EBITDA, was weaker than our expectations. Our estimates are already reasonably bullish for FY2016/17E and we shall assess if there is a reason to be even more aggressive post the earnings call. Rich valuations on aggressive estimates underpin our REDUCE rating.

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Godrej Consumer Products (3QFY15) : Margin surprise. Maintain SELL ::HDFC Sec, report

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Godrej Consumer Products (3QFY15) : Margin surprise. Maintain SELL ::HDFC Sec, report

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Godrej Consumer acquires South Africa based Frika Hair :: IndiaNivesh

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Godrej Consumer - Domestic Disappoints; Margins to Perk up Further; Result Update Q2FY15 :: Edelweiss, link

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Godrej Consumer Products Ltd.|Q2FY15 Result Update | In-line with expectations:: IndiaNivesh

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Kotak reports on Reliance Ind, IndusInd, Godrej and Economy

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J.P. Morgan - Godrej Consumer Products Limited (GCPL IN)

Godrej Consumer Products Limited (GCPL IN) Stepping on cost reduction initiatives in an uncertain demand environment		Overweight Price: Rs780.75 28 Apr 2014 Price Target: Rs865.00 PT End Date: 30 Mar 2015

GCPL’s focus on improving profitability in FY15 is a welcome step, though demand challenges are likely to weigh on near term top-line growth. We believe margins have likely bottomed out in FY14 and expect them to move up in FY15 supported by pricing, better mix and lower cost inflation. Over the medium term rising contribution from new categories, working capital/cost efficiency, improved mix and distribution enhancement would aid healthy growth rates. We maintain our earnings estimates and stay OW on the stock. In the just concluded earnings call, management re-iterated its aim of driving operating profit growth ahead of revenue growth and remains confident of sustaining above industry growth rates. Key takeaways from the call are below:

Godrej Consumer Products Limited (GOCP.NS): 1QF14: Strong Revenues; Earnings miss on higher A&P :Morgan Stanley Research

Godrej Consumer Products Limited (GOCP.NS): 1QF14: Strong Revenues; Earnings miss on higher A&P :Morgan Stanley Research

Quick Comment: GCPL reported Q1 revenue, operating profit and adjusted PAT growth of 24%, 11% and 5%, respectively, compared with our expectations of 20%, 17% and 19%. The highlight of the result is 430 bps gross margin expansion in the domestic business, driven largely by product mix improvement and lower palm derivative prices. Yet operating margins were down 50 bps on higher advertising and sales promotion (+480 bps).

Key Positives: 1) Strong domestic revenue growth of 19%, driven by hair color (32%), household insecticides (24%) and soaps (13%). 2) Consolidated gross margins expanded by 220 bps, led primarily by product mix improvement in the domestic business. 3) Strong local currency performance in the international business with LatAm (+31%), Africa (+58%) and Indonesia (+21%).

Key Negatives: GCPL reported consolidated operating profits 5% below estimates, led by higher staff costs (up 110bps) and advertisement expenses (up 270bps). According to management, Africa business margins (-570 bps) were affected by 1) store rationalization in Kinky and 2) depreciation of SAR against USD. In Indonesia, contract manufacturing of divested foods business at break-even margins and lag in price hikes to pass on ~58% increase in workers' wages affected margins (-260 bps).

Why EW: On the one hand, the recent launch of the hair color business has been very successful. This is a high-margin category that allows GCPL to reinvest part of the gross margin flexibility in driving volume growth in the domestic business. On the other hand, valuations are not favorable even for the strong growth franchisee that GCPL is. We remain particularly concerned about elevated earnings expectations amidst relatively low return ratios in the international business and higher volatility thereon.

Godrej Industries - IC- Axis Capital

·  Godrej Industries - CR - 18 June 2013.pdf

10x in first 10 years and 10x in next 10 years

q  Holding company with 45% M-cap CAGR since inception in 2001 driven by (1) 30% CAGR in consolidated earnings and (2) value unlocking after successfully incubating businesses

q  In 2010-11, management envisaged another 10x growth by 2020. Trajectory seems to be on track, given 2011-13 profit growth at 27%

q  Key strengths: Reputed management, strong brand, high growth consumption driven businesses, history of profitable monetization of new businesses (Godrej Sara Lee, Godrej Foods, Aadhaar, Godrej Hi-care, etc)

q  Core business segments centre around urban and rural consumption – Consumer through Godrej Consumers (GCPL), Agriculture through Godrej Agrovet (GAVL), Real Estate through Godrej Properties (GPL), Chemicals in standalone entity, and urban retail through Nature’s Basket

Technicals- HDIL, CORE Education, Godrej Ind, Zee Entertainment, Indraprastha Gas, SIB, :: Business Line

Outlook- HDIL, CORE Education, Godrej Ind, Zee Entertainment, Indraprastha Gas, SIB, :: Business Line :: Business Line

Godrej Consumer- All is well… but valuations rich:: Religare research

As per our recent interaction with the GCPL management, the company continues to see strong growth across its Household Insecticides, Soaps and International businesses. In our view, GCPL could see some gross margin improvement in H2FY13, but higher brand investment coupled with product launches is likely to cap EBITDA margins. We marginally pare our FY13 earnings estimate on account of higher A&P and maintain HOLD given rich valuations at 27.1x/22.8x FY14E/FY15E earnings.

Godrej Consumer Products :: ICICI Securities, report

Healthy growth in core categories…
We met the management of Godrej Consumer Products Ltd (GCPL) to get
an insight into the company’s operations  and  future  plans.  GCPL  is  the
leader in hair colour and home insecticides (HI) in India and is the second
largest player in soaps in the country. The company is driving growth in
India as well as international markets through its ‘3x3’ strategy according
to which it aims to concentrate on three core categories (HI, household
care and personal wash) in three markets (Asia, Africa and Latin America).
Following the strategy, the company has posted a robust CAGR of 44.9%
and 47.4% in FY08-12 in revenues and earnings, respectively.

Godrej Consumer Products: Revamping the core business, while expanding inorganically:: Kotak Sec,

Godrej Consumer Products: Revamping the core business, while expanding
inorganically
` Core domestic business - new and improved!
` Soaps business in a new avatar; timely relaunch of deodorants portfolio
` Relaunch of hair colour portfolio yielded mixed results; efforts on to revamp it
` Phase II of Darling acquisition announced; synergy benefits are an upside risk

Godrej Consumer :Geographically diversified portfolio: Nomura research,

Geographically diversified portfolio
International strategy delivering
on the promise; more to come
in the next two years

GCPL - A breath of fresh 'aer' :: Edelweiss PDF link

Godrej Consumer (GCPL) has re-entered the domestic ~INR3bn air care market (growing at over 20% YoY) via launch of ‘aer’. The company had exited the segment post Sara Lee (JV partner) sold its personal care business to P&G in 2010. Backed by strong marketing through television commercials, digital media promotion and on ground consumer initiatives, the range of products will be available at INR225 for the diffuser pack, INR299 for dashboard perfume and INR110 for aerosol products; priced at 20% premium to competitors in the category. Also, with increasing consciousness amongst consumers to enhance their lifestyle, we believe this re-entry is likely to be a new growth driver for GCPL and will also strengthen its home care portfolio. Maintain ‘BUY’.

Technicals: Bank of Baroda, Piramal Glass, Everest Industries, Karnataka Bank, Hatsun Agro, CORE Education, Godrej Consumer, ::Business Line

Could you please advise on short- and long-term view of Godrej Consumer Products and CORE Education and Technologies? Is it right time to buy these stocks?

Vishal

Godrej Consumer Products (Rs 554.9): Godrej Consumer Products is in a multi-year bull run. The stock recorded the high of Rs 601 in June and is currently trading close to this peak. The long-term trend in the stock is up. It has strong support in the region between Rs 370 and Rs 406. Long-term investors can hold the stock as long as it trades above this band.

Break below Rs 370 will drag the stock to Rs 346 or Rs 289. Long-term target on a strong break above Rs 600 is Rs 755.

Short-term supports for the stock are at Rs 480 and Rs 458. Investors with greater risk appetite can use declines to these levels to accumulate the stock with stop at Rs 455.

Investment Focus - Godrej Consumer Products: Buy :Business Line,

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Godrej Consumer Products appears to be a good investment for investors with a three-year horizon. The company has delivered high growth even within the FMCG space, by acquiring new brands, entering new categories and building a robust market overseas.

It has managed 51 per cent compounded annual sales growth over the past three years and a net profit growth of 49 per cent on a consolidated basis. At Rs 565, the stock trades at 32 times the trailing twelve month earnings, just below its average earnings multiple in the past five years. It trades at 26 times estimated earnings for 2012-13.

ACQUISITIONS TO THE FORE

Besides domestic presence in soaps, household insecticides and hair colours, Godrej pursued growth through overseas acquisitions. It also smoothly and quickly integrated these acquisitions, which now contribute 40 per cent of revenues. The acquired companies are mostly in emerging economies of Asia, Africa and Latin America, and are market leaders in their respective geographies.

Further, all acquisitions operate in segments that are a good fit to Godrej's own domestic operations which can help cross-selling of its own products. Godrej is also set to derive cost benefits from integrating acquisitions in the African and Latin American regions.

Global revenues jumped 54 per cent in 2011-12, helped partly by the weakening rupee. Inflow from overseas markets will receive a further boost from additional stake acquisition in Africa's Darling group and Chile's Cosmetica Nacional.

DOMESTIC MARKETS HOLD

A strong rural and urban presence, and consumers continuing to buy smaller-value, frequent-use FMCGs helped overcome demand pressures. Household insecticides and soaps both grew well ahead of overall market growth.

Godrej achieved strong volume growth along with price rises in soaps. In hair-colours, while growth was below that of the overall market, new products could push sales going forward. Over the years, the product mix has also changed in favour of the higher-margin hair colour and insecticides. Consolidated operating margins improved to 21.6 per cent for 2011-12, against 19.7 per cent the year before. Helping margin improvement was the low-cost inventory in Africa and more judicious adspends.

However, higher input prices and limited room for more cuts in advertising could prevent significant margin improvement in the coming quarters. Godrej's debt-equity ratio stands improved to 0.4 times, the company having received an equity infusion of Rs 685 crore. Repayment of dollar-denominated debt, at $305 million (end-March 2012), is also staggered over the next several quarters, mitigating the effects of a volatile rupee. Consolidated operating profits cover interest payments by a comfortable 16 times.