Godrej Consumer gains as Q2 result cheers Street, brokerages say ‘buy’

Godrej Consumer reported a consolidated net profit of Rs 432.77 crore for the July-September quarter, a 20.59 percent gain from the year-ago quarter

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Godrej Consumer shares gained 2.10 percent at open to Rs 995,15 on November 2. Godrej Consumer Products’ second quarter earnings have largely met expectations, showing improvement in both India performance and overseas outlook. Brokerages have maintained their “buy” calls on the stock, citing high growth through FY25. By 9:30 am, the stock was trading at Rs 989.79, around 1.38 percent higher than yesterday’s close.

The company announced the results on November 1 after the market hours. At close, the stock was trading at Rs 976.80, down by around 1.52 percent.

Godrej Consumer Products (GCPL) reported a consolidated net profit of Rs 432.77crore for the July-September quarter, a 20.59 percent gain from the previous fiscal. Revenue grew 6.19 percent to Rs 3,601.95 crore, the company said in an after-market-hours announcement on November 1.

At close, the stock was trading at Rs 976.80, down by around 1.52 percent.

Its earnings before interest, tax, depreciation and amortization (EBIDTA) grew 29.9 percent to Rs 704 crore in Q2FY24, while the EBIDTA margin was at 19.6 percent, expanding 360 basis points from the previous fiscal.

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The company also announced an interim dividend of Rs 5 a share.

GCPL has improved India business sales growth in recent years, delivering double-digit volume growth in 2QFY24 and is likely to deliver double-digit sales/EBITDA/PAT growth over FY23-25E, analysts at Motilal Oswal said in a note.

According to the brokerage, “disruptive innovations, access packs and higher, but concentrated, ad-spends should result in consistently healthy growth in this high-margin and high-ROCE domestic business”.

The profitability outlook for the overseas business is steadily improving, driven by robust growth in Indonesia and African countries. Motilal Oswal has a “buy” rating on GCPL with a target price of Rs 1,150.

Also read: Godrej Consumer Q2: Net profit rises 20.59% to Rs 432.77 crore, revenue up 6.19%

Analysts at HSBC, too, maintained a “buy” call with a target price of Rs 1,220. According to the brokerage, the company will need a “sustainable trajectory of Household Insecticides (HI) and Raymond Consumer Care Business (RCCL) as key growth catalysts”.

In a post-earnings release, GCPL said the company “delivered a steady performance in 2Q FY2024, despite the tough operating environment”. The company continues to remain focused on driving volume-led growth along with healthy investments in brands and improving profitability.

“We continue to have a strong balance sheet. We are on track in our journey to reduce wasted cost and are deploying this to drive profitable and sustainable volume growth across our portfolio through category development,” the company said.

In a conversation with CNBC-TV18,  Sudhir Sitapati, Godrej Consumer said that they expect to see an uptick due to the festive season in Q3 and they
expect significant changes in Africa which will lead to expansion of margin
“Our goal is to achieve 10 percent volume growth, he added.

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