Analyst Corner: Maintain ‘add’ on GCPL; firm gaining share in soaps space

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December 22, 2020 8:27 AM

GCPL expects HI portfolio to deliver high single-digit to low double-digit growth on normalised basis.

The management indicated that Good Knight (GK) Gold Flash (launched in Feb 2020) has received encouraging response and is driving premiumisation /upgrade from burning formats.

Key takeaways from call with Sunil Kataria, CEO-India and SAARC. GCPL expects HI portfolio to deliver high single-digit to low double-digit growth on normalised basis. Encouraging response to GK Gold Flash and NPD pipeline inspire confidence, GCPL is gaining share at mass as well as premium end in the soaps category, hair colors witnessed a v-shaped recovery lately, thrust on Protekt, Proclean, air care and fabric care is in line with the vision to transform into an HPC company with presence across 10 segments as against four a year ago. Maintain ADD.
Sustainable trends in hygiene category beyond Covid. The management indicated that the hygiene category can be classified into two formats core hand hygiene. Hand wash penetration in India is up to about 34% from 19% in the past 8-9 months (but for Covid, it would have taken five years for handwash to cross 30% penetration). This category will continue to grow at a healthy rate even if penetration comes off a bit after Covid, new categories (sanitizer and disinfectant sprays). These products witnessed an abnormal spike during Covid. Sales have started to come off sharply but it may still settle at a decent threshold level as compared to virtual non-existence of this category pre-Covid.

Home Insecticide (40% of India business). The management indicated that Good Knight (GK) Gold Flash (launched in Feb 2020) has received encouraging response and is driving premiumisation /upgrade from burning formats. In Nov 2020, GCPL launched GK Smart spray (multi-insect killer spray) at Rs 199/150 ml (700 sprays) in Andhra Pradesh. Per management it is the only comprehensive and complete solution of HI, globally. It has the longevity of the electric/ burning format and intensity of aerosol. GK Smart spray is a liquid spray (non-gas formulation) that gives instant relief from mosquitos and its effect lasts for eight hours. In addition to these launches, GCPL is working on two disruptive launches (in 6-8 months) to accelerate category trials.

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