Godrej Consumer stock falls as company expects drop in volumes, decline in EBITDA in Q2FY23

After Marico, FMCG firm Godrej Consumer Products came out with a disappointing quarterly update which dragged the stock down by 5 percent on October 6. The company said that it expects mid-single-digit volume drop, with a low single-digit 3-year volume CAGR, as the FMCG industry continued to remain soft during the quarter.

At 11:10am the stock was trading at Rs 850.20 apiece on the BSE, down 5.14 percent, while the benchmark Sensex was at 58,508.33, up 442.86 points or 0.76 percent.

Follow our live blog for all the market action

In India, the company expects to deliver high single-digit sales growth. “Meanwhile in Indonesia, with hygiene performance waning after COVID-19 and a large hygiene comparator in the base, we expect early double-digit constant currency sales decline. We expect close to high single-digit sales growth (excluding hygiene),” the company said in a stock exchange filing.

Godrej Consumer’s growth momentum across key countries Africa, USA, and Middle East (GAUM) continued. “We expect to deliver constant currency sales growth in the low-teens,” it added.

On the profitability front, the company is anticipating a mid-teen decline in EBITDA due to consumption of high cost materials, significant upfront marketing investments to drive category development and a weak performance in Indonesia.

However, Goldman Sachs has a Buy call on the stock with a target price of Rs 1,100 per share. “We see the company as a strong turnaround candidate. “India home care growth has improved and Indonesia is showing initial signs of recovery,” it said.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.???