We present key highlights and investment rationale for Godrej Consumer Products after its FY22 annual report.
Appointment of new leaderships - Sitapati in India and Sethuraman in Indonesia - should be helpful to drive muted HI and Indonesia business. Over next 3-5 years GCPL aims to achieve double digit volume growth driven by penetration, market share gains, radical simplifications and disruptive innovations.
GCPL aims to achieve double digit volume growth driven by: Penetration (top 4 GCPL products which contributes 60 per cent of profit are less than 20 per cent penetrated; market share gains (by higher media spends and launch of access packs); and simplifying focus (reducing SKUs, centralising category development). Driven by success of last two online-only products, the launch of Goodknight Mosquito Net is positive.
GCPL aims to reach 7 million outlets during FY22-23 driven by penetration in general trade. In urban India store expansion will be based on opportunity based micro-segmentations while in rural India; GCPL aims to reach villages with less than 3,000 population through B2B joint venture.
We maintain GCPL as one of our high conviction idea. Recovery in HI segment and Indonesia under new management shall be key triggers. We value GCPL at 45x FY23 EPS.