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ICICI Securities
Godrej Consumer (Add)
Target: ₹1,000
CMP: ₹958.45
Godrej Consumer Products Ltd under Sudhir Sitapati's leadership is targeting double-digit UVG (underlying volume growth) over the medium term. Sudhir Sitapati's presentation was jargon-free; it had measurable targets and granular build-up of growth.
During the course of presentation, our analyst was reminded of strategy templates presented by Nitin Paranjpe, CEO, HUL (2008 - 2013).
GCPL’s refreshed template includes: focus on penetration-led growth; focus on category development; reducing complexity; focus on core; larger, impactful innovations with higher patience and staying power; and save (gross margins, discounts, overheads, non-media ATL) and invest (in media, sampling, talent, digital, automation, distribution).
Our earnings estimates are unchanged; modelling revenue/EBITDA/PAT CAGR of 11 per cent/14 per cent/13 per cent over FY21-23. Maintain Add with an SoTP-based unchanged target price of ₹1,000. At our target price, the stock will trade at 45x P/E multiple Mar-23.
Key downside risk is structural deceleration in India household insecticides and steep input cost pressure.
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