Nuvama predicts 40% upside for this FMCG giant  on surging global sales – Do you own it?

The brokerage house has maintained a target price of Rs 1,505. This translates to an upside potential of nearly 40% from the current market price.

The bullish outlook comes after the company’s business update for Q1FY27, which pointed towards healthy revenue growth across both domestic and international markets. 

Although higher raw material costs are expected to keep margins under pressure in the near term, the brokerage believes profitability could gradually improve as the financial year progresses.

Let’s take a look at the key reasons making the brokerage so bullish –

Broad-based growth remains the biggest positive

As per Nuvama report, one of the biggest reasons behind the positive outlook is the company’s broad-based growth across its businesses.

Nuvama expects Godrej Consumer’s consolidated revenue to grow 17.1% year-on-year, while earnings before interest, taxes, depreciation and amortisation (EBITDA) are likely to increase 12.4% during the first quarter of FY27.

The brokerage estimates that the company’s India business could report around 8% volume growth and 12% revenue growth, supported by stable demand across categories such as home care and personal care.

“India volumes/sales to grow 8%/12% YoY,” Nuvama said.

International business continues to support growth

Another factor supporting Nuvama’s positive view is the improving performance of Godrej Consumer’s overseas operations.

According to the Nuvama report, the Indonesia business is expected to post around 10% volume growth and 15% revenue growth, helped by easing competition in the market.

The brokerage also expects strong momentum from the company’s Godrej Africa, USA and Middle East (GAUM) business.

“GAUM sales to expand ~20%,” according to the brokerage report, indicating broad-based demand across product categories.

The international business as a whole is expected to record around 15% revenue growth in Indian rupee terms during the quarter.

Margins may stay under pressure now, but recovery is expected

While revenue growth remains on the radar, Nuvama believes higher input costs will continue to affect profitability in the short term.

According to the brokerage report, consolidated gross margin is expected to decline by about 80 basis points to 51.1%, while EBITDA margin may fall 77 basis points to 18.2%.

However, the brokerage believes these pressures are likely to reduce gradually.

“Input costs remained elevated in Q1 – easing towards quarter-end – with the company mitigating via calibrated pricing actions, cost-saving programmes and media optimisation,” the report said.

It further added, “Margins are likely to recover progressively through FY27.”

The brokerage expects measures such as selective price increases, cost-saving initiatives and better advertising efficiency to support profitability over the coming quarters.

What is the brokerage outlook?

Nuvama in its report added that  Godrej Consumer  is entering the new financial year with improving demand trends in both domestic and international markets. Although higher raw material costs remain a challenge, the brokerage expects earnings growth to stay healthy as revenue expands across segments.

According to the report, the  Godrej Consumer share price  is currently trading at 45 times its estimated earnings per share for FY27 and 38 times its estimated earnings per share for FY28. The brokerage believes improving volumes, steady international growth and a gradual recovery in margins could support its long-term outlook.

Disclaimer: This article references a specific brokerage recommendation and target price for Godrej Consumer Products. Such market commentary and projections are for informational purposes only and do not constitute direct financial advice, an offer, or a solicitation to buy or sell securities. Investors should note that equity investments are subject to market risks, and past performance or brokerage forecasts are not reliable indicators of future results. Please consult a SEBI-registered financial advisor before making any investment decisions. This disclaimer has been generated using AI to support user well-being and responsible content consumption.