Godrej Consumer Products share price tumbled 1.9% to Rs 1,011.05 today after the company’s net profit fell 7.6% to Rs 318.82 crore in Q1FY24 compared to Rs 345.12 crore in the year-ago period. It posted revenue from operations at Rs 3,448.91 crore, up 10.4% as against Rs 3,124.97 crore during the same period last year. Analysts at Nuvama and Motilal Oswal have recommended a ‘Buy’ rating on the stock. GCPL stock has fallen over 4% in the last one month while it has risen 17% in the past one year.
The adjusted PAT missed Motilal Oswal’s estimate by 14.7%, affected by the currency depreciation in Nigeria and the reported PAT declined 7.6% on-year due to a stamp duty payment on the acquisition of the Raymond business. According to Nuvama, there are major 3 key risks for GCPL going ahead – 1) A slowdown in rural demand due to lower government spending or a monsoon failure could impact the company’s revenues significantly; 2) Depreciating INR, Indonesian rupiah and Argentine Peso can impact profitability; 3) GCPL’s ability to gain market share in its soap segment could be adversely affected by the aggression of HUL, ITC, Wipro, etc.
Should you buy, sell or hold GCPL stock?
Motilal Oswal: Buy – Target Price: Rs 1200
“A healthy pace of earnings growth (EBITDA/PAT CAGRs in the mid-20s over FY23-FY25E) is likely to be led by: a) superior growth in highly profitable markets such as India and Indonesia; b) volume growth; and c) continuing capacity enhancement by capex in the organic portfolio. We reiterate our BUY rating with a target price of Rs 1,200 (based on 45x FY25 EPS).”
Nuvama: Buy – Target Price: Rs 1315
“GCPL has approved a capex of Rs 9bn for ~20% capacity addition in Home Care and Personal Care categories. Going forward, we continue to see top-tier earnings growth. On balance, we maintain ‘BUY’ with an unchanged PE multiple of 50x, yielding a target price of Rs 1,315.”