Godrej Consumer Products Limited (GCPL) gained nearly 3.5
per cent on Monday after the FMCG major reported a higher-than-expected
net profit in its September quarter, aided by higher margins.
The FMCG major reported a 22.5 per cent increase in consolidated net profit to Rs 287.16 crore while total income from operations rose 9 per cent to Rs 2,244.94 crore.
Its operating income or EBITDA, grew 19 per cent to Rs 404 crore while gross margin expanded by 500 basis points to 56.9 per cent, supported by lower raw material cost. EBITDA or operating margin rose to 18 per cent in line with estimates, up 156 basis points year on year and 311 basis points sequentially.
However, domestic volume growth tapered down to 9 per cent due to sluggish demand, slowing down from 13 per cent in June quarter. Household insecticide segment recorded revenue growth of 13 per cent while hair colour at 17 per cent, backed by double-digit volume growth, whereas soaps saw deflationary pressure with volume growth of 5 per cent and value growth of 3 per cent, Religare said in a note.
Overall, GCPL's India business reported sales growth of 8.6 per cent in Q2 while its international businesses at 10.6 per cent.
Religare maintains a hold rating on the stock with a target price of Rs 1,350, citing high valuations. "With only a sluggish pick-up in demand and higher competitive intensity, we expect GCPL's growth to come under pressure. This coupled with rich valuations limits share price upsides," the brokerage said.
At 11:15 a.m., GCPL shares were up 2.6 per cent as compared to marginal decline in Nifty.
The FMCG major reported a 22.5 per cent increase in consolidated net profit to Rs 287.16 crore while total income from operations rose 9 per cent to Rs 2,244.94 crore.
Its operating income or EBITDA, grew 19 per cent to Rs 404 crore while gross margin expanded by 500 basis points to 56.9 per cent, supported by lower raw material cost. EBITDA or operating margin rose to 18 per cent in line with estimates, up 156 basis points year on year and 311 basis points sequentially.
However, domestic volume growth tapered down to 9 per cent due to sluggish demand, slowing down from 13 per cent in June quarter. Household insecticide segment recorded revenue growth of 13 per cent while hair colour at 17 per cent, backed by double-digit volume growth, whereas soaps saw deflationary pressure with volume growth of 5 per cent and value growth of 3 per cent, Religare said in a note.
Overall, GCPL's India business reported sales growth of 8.6 per cent in Q2 while its international businesses at 10.6 per cent.
Religare maintains a hold rating on the stock with a target price of Rs 1,350, citing high valuations. "With only a sluggish pick-up in demand and higher competitive intensity, we expect GCPL's growth to come under pressure. This coupled with rich valuations limits share price upsides," the brokerage said.
At 11:15 a.m., GCPL shares were up 2.6 per cent as compared to marginal decline in Nifty.
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