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Playbook remains unchanged; positive outcomes set to continue

* Godrej Consumer (GCPL) reported a 6% YoY consolidated net revenue growth to INR33.8b (exactly in line); constant currency (CC) growth was 30% YoY in 4QFY24. The India business clocked 12% YoY revenue growth (5% organic) with a volume growth of 15% YoY (7% organic).

* In India, the home care and personal care segments registered 6% and 4% YoY growth, respectively. The HI category was hit by a subdued season, especially in the North and East. Personal wash clocked high single-digit volume growth, sustaining its market share gain. The hair color volume growth was in double digits. RCCL clocked a strong 22% YoY growth with a sales run rate of INR1.4b during the quarter.

* The international performance was hit by forex. Indonesia’s revenue was up 15% YoY (17% in CC) with a healthy UVG of 12%. GUAM’s revenue performance was hit by the devaluation of the naira; it posted +16% YoY growth in CC terms.

* GCPL clocked strong volume growth in FY24 and aims to deliver high singledigit volume growth in FY25. The company plans to keep expanding its TAM. It is also looking to gain share in rural markets by expanding its market reach. Under Project Vistaara 2.0, the company plans to double the outlet coverage and triple the village coverage. There are still various profitability levers (RCCL, Indonesia, and ROW) available for GCPL to further improve its margin metric.

* We raise our EPS by 1%/3% for FY25/FY26. We reiterate our BUY rating with a TP of INR1,550 (based on 55x FY26E EPS).

Strong volume-driven performance

Consolidated performance

* Volume growth remains strong: GCPL’s 4QFY24 consolidated net sales grew 6% YoY to INR33.8b (exactly in line). Consolidated sales grew 30% YoY in CC. Consolidated volume grew 12% YoY, and organic volume rose 9% YoY.

* Strong earnings growth led by margin expansion: The gross margin expanded 320bp YoY to 56.1% (est. 56.0%). EBITDA grew 14% YoY to INR7.6b (est. INR7.7b), PBT rose 20% YoY to INR6.9b (est. INR7.1b), and adj. PAT increased 22% YoY to INR5.7b (est. INR5.3b). As a percentage of sales, higher ad spending (+200bp YoY to 9%), lower other expenses (-65bp YoY to 15.1%), and higher staff costs (+15bp YoY to 9.6%) led to an EBITDA margin expansion of 170bp YoY to 22.5% (est. 22.8%).

* FY24 performance: GCPL’s net sales/EBITDA/adj. PAT grew 6%/26%/16% YoY. Consolidated sales grew 21% YoY in CC with volume growth of 10% YoY. The India business volume grew 13% YoY and Indonesia volume rose 11% YoY. The Board declared an interim dividend of INR10/share.

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