Domestic sales growth was weak, led by key categories soaps (-23%), household insecticides (-16%), hair colours (-23%). Indonesia was more resilient; Africa continues to face macro headwinds and will take time to recover. GCPL hopes for gradual improvements in the coming quarters (mostly H2). Retain ‘hold’ with TP of `600 (previous Rs 750).
Subdued performance continues, the key issue for GCPL has been that its operating performance in almost all geographies (barring sequential improvements in Indonesia) has been deteriorating — or has remained patchy — for the last few quarters. Covid has exacerbated that in the near term. Standalone sales/Ebitda/clean PAT declined by c18%/24%/21% y-o-y, respectively, as domestic volumes declined sharply (15%) due to the country-wide lockdown in the last fortnight of March. The Africa cluster too was significantly under pressure, leading to consolidated sales/Ebitda/clean PAT declines of 12%/17.8%/26% y-o-y, respectively, which managed to meet an already low consensus.
Domestic business weakness led by key categories International business continues to be mixed, Indonesia sales were relatively resilient at 6% y-o-y growth in constant currency. GAUM cluster growth was muted at -13% (constant currency) driven by the Africa sales decline of -15% y-o-y.
GCPL’s factories are now operational and 80% of its distribution is now back to work. It is also augmenting its production and distribution muscle using third parties to get back to normalcy as soon as possible. The Africa outlook remains challenging while the Indonesia portfolio is well suited for post Covid shifts in consumer preferences. While near-term uncertainty is likely to prevail, GCPL aims to manage costs aggressively to return to profitable growth across its footprint.