Market gives thumbs up to Godrej Consumer

Our Bureau Chennai | Updated on May 12, 2021

Sudhir Sitapati

Stock jumps 22% as analysts expect re-rating soon

Shares of India’s Godrej Consumer Products Ltd. zoomed 25 per cent on Wednesday, after the company has appointed Sudhir Sitapati, former Executive Director of Hindustan Unilever. While appointing Sitapati as MD and CEO, the company said, Nisaba Godrej, currently the Chairperson and Managing Director of the company, will continue to serve as Executive Chairperson.

The stock jumped to day’s high of ₹894.90 on the BSE and closed a tad lower at ₹874.80, up 22.19 per cent, over the previous day's close. Meanwhile, Hindustan Unilever shares slipped 3 per cent at ₹2,329.05.

Motilal Oswal Financial said that it views Sudhir Sitapati’s appointment as MD and CEO of Godrej Consumer as a potentially transformative event in the fortunes of the company.

“Sitapati comes with impressive experience in heading Hindustan Unilever’s F&R business and as part of the senior management team in the detergents business, which have done very well under his tenure and where marketing campaigns in both segments have had a high value impact”.

Under-performance to end

According to Emkay Global, the stock's recent under-performance and hiring of Sudhir Sitapati as CEO may increase optimism and drive near-term upsides. “We await more visible improvement in growth,” Emkay Global, which retained Hold rating with a target price of ₹780, said.

The stock has underperformed the sector by a wide margin with a return of about 22 per cent in the last three years as against the sector average return of 41 per cent.

Adequate time available

His appointment as MD and CEO for five years, as well has his relative young age (mid-40s), gives him adequate time to formulate and implement strategic changes, Motilal Oswal added.

For ICICI Securities, appointment of Sudhir Sitapati as MD & CEO (effective October 18, 2021) is a likely a re-rating event.

According to ICICI Securities, its Q4-FY21 performance was impressive with 24 per cent domestic revenue growth in January-February 21, continued profitable recovery in Africa while Indonesia stabilised. Post result, it upgraded the stock from Add to Buy with a target price of ₹850.

Net profit jumps

The company on Tuesday also reported a strong set of quarterly numbers. The company's consolidated net profit jumped to ₹366 crore in the quarter ended March, 31, as against ₹230 crore in the year-ago period. The company said its consolidated total income was up 27 per cent to ₹2,747 crore (₹2,203 crore).

Published on May 12, 2021

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