Buy Godrej Consumer Products Ltd For Target Rs.1,330 - Motilal Oswal Financial Services Ltd
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Modest growth, margin expansion continues
Godrej Consumer Products (GCPL) released its pre-quarterly update for 3QFY24. Here are the key takeaways:
* India business:
* Demand environment remains similar to that witnessed in 2Q.
* Organic business reported mid-single-digit volume growth.
* Reported volume growth (including acquisition) was in double digits.
* Indonesia business:
* The Indonesia business is expected to clock double-digit growth in volume and high-single digit CC sales growth.
* GAUM (Godrej Africa, the US, and the Middle East) business:
* It is expected to register flat growth or a mild decline in volume. Sales growth was in double digits in CC basis.
* In INR terms, sales declined in high-single digits due to Naira adverse currency translation impact.
LATAM business
* LATAM revenue was hit by a sharp devaluation of Argentinian Peso, impacting 9M revenue.
* Despite challenges, the business has maintained volume growth.
* Consolidated:
* Organic business volume is expected to grow in mid-single digits.
* Revenue is expected to decline in low-single digits YoY in INR terms due to GAUM and LATAM currency and hyperinflation.
* Reported volume growth is expected to reach high-single digits, while reported sales growth could remain relatively flat in INR terms.
* EBITDA margin may expand YoY, along with higher category development investments.
* Raymond Acquisition
*The performance of Park Avenue and KamaSutra improved sequentially and they are on track to achieve full-year guidance.
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