Sharekhan has given Buy recommendation for Godrej Consumer Products with a target price of Rs. 1249 in its research report issued on Dec 20, 2021

Sharekhan’s research report on Godrej Consumer Products

Analyst conference hosted by Mr. Sudhir Sitapati, Managing Director (MD) & CEO of GCPL, was more focused on filling the business gaps to improve the revenue and earnings growth in the medium term. However, the long-term vision of the leadership was missing in the meet. The company is aiming at achieving double-digit volume growth through penetration gains in 50% of the portfolio, moderate share gain in 50% of portfolio, consumption-led market growth, and disruptive innovation. Headwinds such as raw-material inflation and pandemic-led uncertainties will keep a toll on earnings growth in the near term. However, management is confident of achieving 150-200 bps OPM expansion, driven by better mix and cost-saving measures in the stable market environment.

Outlook

The stock has corrected by 18% in the past three months and is currently trading at a discounted valuation of 39x/33x its FY2023/FY2024E EPS. We maintain our Buy recommendation on the stock with an unchanged PT of Rs. 1,249.

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