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Lower-than-expected margins announced by Godrej Consumer Products in its quarterly results adversely impacted the stock on Monday. The stock fell 4.93 per cent on Monday to close at Rs 688.95, after touching a 52-week high of Rs 759.80 during intra-day trade, as several brokerages downgraded the stock.
According to Kotak Securities, margins shrunk due to ‘higher advertising and promotion spends’ and adverse seasonality (Africa, Latin America). Kotak downgraded the stock to sell.
However, Kaustubh Pawaskar, FMCG Analyst, Sharekhan, said: “We have upgraded the stock to ‘Buy’ believing it to have a decent upside and strong earning visibility going forward as the management has indicated that the second half of the year would be seasonally better for the business and the company’s innovation and distribution-led strategy should hold good.” The company also announced a leadership succession plan with Vivek Gambhir, the present Chief Strategy Officer of Godrej Industries and associated companies, set to become the new MD succeeding A. Mahendran who retires on June 30, 2013.
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