Sharekhan has given Buy recommendation for Godrej Consumer Products with a target price of Rs. 959 in its research report issued on May 19, 2022

Sharekhan’s research report on Godrej Consumer Products

Godrej Consumer Products (GCPL) Q4FY2022 was affected by global commodity inflation, a slowdown in the domestic market and sustained subdued performance in the Indonesia business. Consolidated revenues grew by 7% and adjusted PAT decreased by 4% y-o-y. The company aims to achieve double-digit revenue growth through penetration improvement, market share gains, steady consumption environment, and innovation in key markets. Indonesia is expected to come back on track in the next two quarters, while Africa will continue to grow in double digits. GCPL eyes OPM expansion in FY2023 through better mix and cost-saving measures in the medium term. Any correction in palm oil prices will further drive up margins.

Outlook

The stock has underperformed versus broader indices and trades at attractive valuation of 39.5x/33.5x its FY2023E/FY2024E EPS. We maintain Buy with an unchanged price target of Rs. 959.

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