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Better international show aids the Q4FY24 beat

GCPL’s Q4FY24 results beat our expectations, with inline sales growth of 6% albeit better margin at 22.3% (up by 230bps YoY) driving the EBITDA (up 18% YoY) beat of 6%; the lower tax rate (at 17%) drove the adj. PAT (up 22% YoY) beat of 15%. Domestic business performance missed expectations, with sales and EBITDA growing 12% each (OPM at 26.6% stood flat YoY). International business reported a 2% decline, affected by reorganization (Rs4.7bn) of the East Africa business; EBITDA expanded 34% YoY, with EBITDA margin expansion of 435bps YoY to 16.1%. The company has recognized the impairment charge of Rs13.9bn towards Brand and Goodwill for the Africa cluster. We will review our estimates after the investor meet scheduled for 7- May-24. We maintain ADD on GCPL, with Mar-25E TP of Rs1,350, on 50x P/E.

Weak domestic performance – Sales and EBITDA grew 12% each in Q4FY24

GCPL’s topline grew 6% YoY to Rs34bn (in-line). Domestic revenue grew 12% YoY to Rs20bn, with 15% volume growth. Organic business grew 5% to Rs18.7bn, with 7% vol. growth. HI put up a poor show due to a weak winter in the North and parts of the East. Incense stick launch under a new formulation is seeing positive response. Personal care enjoyed a strong show, with high single-digit volume growth. Hair color, air freshener, and Fabric care saw double-digit vol. growth. Raymond portfolio saw 22% YoY growth to Rs1.37bn (seasonally weak quarter). Domestic EBITDA margin at 26.6% stood flat YoY. In Q1FY25, GCPL has launched Cinthol Foam Body wash in select markets, at Rs120/unit.

Better international show drives the EBITDA and PAT beat

Overall international revenue at Rs13.8bn declined 2% vs our expectations of a 10% decline. International EBITDA saw healthy growth of 34%, with 16% EBITDA margin (up by 435bps YoY). Indonesia business reported 15% sales growth (aided by a good show in HI and shift in the Lebaran period to Q4) to Rs5bn, and 34% EBITDA growth to Rs1.3bn (EBITDA margin at 25.2% expanded by 360bps YoY). GAUM cluster revenue declined 23% YoY to Rs5.93bn, affected (by Rs4.7bn) by the reorganization of the East Africa business, whereas EBITDA grew 55% YoY to ~Rs850mn (OPM at 14.3% expanded by 720bps YoY). Other countries (comprising of SAARC and LatAm) saw 41% growth to Rs2.87bn (+262% CC growth), and EBITDA margin stood at 4% (vs 8.5% in Q4FY23).

We maintain ADD, on limited upside potential

During Q4, the company created an impairment charge of Rs13.9bn towards Brand and Goodwill for Africa (including ‘Strength Of Nature’) and recognized loss of Rs9.3bn on sale of subsidiaries and businesses in East Africa. After a gap of three years, the BOD has declared dividend of Rs15/sh (~75% payout on adjusted PAT). We will review our estimates following the investor meet scheduled for 7-May-24. We maintain ADD, with TP of Rs1,350, on 50x P/E, at 20% premium to its last 5Y avg. fwd. P/E.

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