Godrej Consumer regains Rs 1 trn m-cap, hits 52-wk high on strong Q4 update

Godrej Consumer Products (GCPL) regained Rs 1-trillion market capitalisation (market cap) after the stock of the personal care products company hit a 52-week high of Rs 978.50, up 1 per cent on the BSE in Thursday's intra-day trade. The feat comes after Godrej Consumer India business witnessed strong double-digit volume and value growth in the March quarter (Q4).

On a consolidated level, the company expects to deliver double-digit growth in rupee terms led by mid-single digit volume growth. Gross margin recovery, and continued marketing investments should translate to strong double-digit Ebitda growth, it said.

In the past one month, the stock of the Godrej Group company has outperformed the market by surging 6 per cent, as compared to 0.51 per cent decline in the S&P BSE Sensex. Further, in the past one year, it has rallied 29 per cent, as against 0.51 per cent rise in the benchmark index. It had hit a record high of Rs 1,138.50 in September 2021.

GCPL ranks among the largest Household Insecticides, Air Care and Hair Care players in emerging markets of India, Indonesia, and Africa. In Household Insecticides, the company is the leader in India, the second largest player in Indonesia, and is expanding its footprint in Africa.

"In India, consumer demand trends remained steady through the quarter, with FMCG sector expected to witness gradual recovery in growth rates. The performance of our India business has exceeded expectations especially on the volume front," GCPL said in quarterly update.

The company expects to deliver double-digit volume and value growth. Overall, the growth was broad based and led by double-digit volume and value growth in both Home Care and Personal Care, GCPL said.

Indonesia business has started to see gradual recovery in performance with mid-single digit constant currency sales growth. The growth ex-Hygiene is close to double digits. “We believe building blocks in Indonesia are in place to drive steady-to-strong performance in the next fiscal year,” the company said.

Godrej Africa, US, and Middle East (GAUM) is clocking higher than mid-single digit sales growth in constant currency terms, it added.

Motilal Oswal Financial Services (MOFSL) expects the sharp decline in palm oil prices to lead to sequential and YoY improvement in gross margins for GCPL. Despite likely higher ad spend, EBITDA growth YoY for 4QFY23 and beyond is likely to be over 25 per cent, the brokerage firm said in its results preview report.

We would watch out for the outlook in Household Insecticides category and for the commentary on GAUM and Indonesia business, MOFSL said.