We maintain Buy with Jun\u201127 target price of \u20b91,250, based on 44x P\/E, in line with the 5-year average fwd P\/E. Godrej Consumer Product\u2019s (GCPL) thrust on execution is reflecting in healthy revenue momentum, which is capable of absorbing category disruptions well.<\/p>\n
However, high RM dependence on imports has a bearing on its margin performance. We expect the company to navigate setting with proactive actions and expect it to enhance its outlook. The company\u2019s key objective has been enhancing volume growth to double digits (9 per cent achieved in Q1), turning around GAUM (achieved), and decisively turning around in HI in India (remain a seasonal tussle).<\/p>\n
Q1 result stood in line with estimate, with 19 per cent topline, 15 per cent EBITDA, and 10 per cent earnings growth (lower non-operating income). After reallocating the exports business into home care and personal care, revenue growth across both segments was broad\u2011based at 11-12 per cent.<\/p>\n
The management has broadly reiterated its FY27 guidance while flagging sustained RM headwinds.<\/p>\n
We believe recovery in core categories will remain dependent on supportive macro and seasonal conditions. That said, execution remains strong, as evidenced by the rapid scale\u2011up of recent initiatives.<\/p>\n
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