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Godrej Consumer
Godrej Consumer Products Ltd (GCPL) is a major player in the Indian FMCG market with a strong presence in
the personal care, hair care and home care segments in India. The recent acquisitions (in line with the 3x3
strategy) have immensely improved the long-term growth prospects of the company.
On the back of strong distribution and advertising & promotional support, we expect GCPL to sustain the
market share in its core categories of soap and hair colour in the domestic market. On the other hand,
continuing its strong growth momentum the household insecticide business is expected to grow by 19% YoY.
In the international markets, the Indonesian and Argentine businesses are expected to achieve a CAGR of
around 25% and 15% respectively over FY10-13. Overall, we expect GCPL’s consolidated revenues to grow at a
CAGR of about 19% over FY11-13.
Due to the recent domestic and international acquisitions, the company’s business has transformed from a
commodities soap business into the business of value-added personal care and home care products. Hence,
we expect its OPM to sustain at around 18% in the coming years. Overall, we expect GCPL’s bottom line to
grow at a CAGR of about 20% over FY11-13.
We believe increased competitive activity in the personal care and hair care segments and the impact of high
food inflation on the demand for its products are the key risks to the company’s profitability.
At the current market price the stock trades at 21.9x its FY12E EPS of Rs17.8. We have a Buy recommendation
on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Godrej Consumer
Godrej Consumer Products Ltd (GCPL) is a major player in the Indian FMCG market with a strong presence in
the personal care, hair care and home care segments in India. The recent acquisitions (in line with the 3x3
strategy) have immensely improved the long-term growth prospects of the company.
On the back of strong distribution and advertising & promotional support, we expect GCPL to sustain the
market share in its core categories of soap and hair colour in the domestic market. On the other hand,
continuing its strong growth momentum the household insecticide business is expected to grow by 19% YoY.
In the international markets, the Indonesian and Argentine businesses are expected to achieve a CAGR of
around 25% and 15% respectively over FY10-13. Overall, we expect GCPL’s consolidated revenues to grow at a
CAGR of about 19% over FY11-13.
Due to the recent domestic and international acquisitions, the company’s business has transformed from a
commodities soap business into the business of value-added personal care and home care products. Hence,
we expect its OPM to sustain at around 18% in the coming years. Overall, we expect GCPL’s bottom line to
grow at a CAGR of about 20% over FY11-13.
We believe increased competitive activity in the personal care and hair care segments and the impact of high
food inflation on the demand for its products are the key risks to the company’s profitability.
At the current market price the stock trades at 21.9x its FY12E EPS of Rs17.8. We have a Buy recommendation
on the stock.
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