Upcoming Dividends: FMCG Largecap Stock To Recommend Dividends First Time Since Covid Outbreak; Q2 Soon, Buy?

Leading emerging markets company, Godrej Consumer Products is looking to recommend interim dividend to its shareholders for the financial year 2023-24. This would be the first dividend in over 3 years, as the last time this FMCG giant paid a dividend was before the Covid-19 pandemic outbreak. Godrej will also announce its Q2 results alongside dividends in a meeting scheduled on November 1, 2023.

In its regulatory filing, Godrej said, "This is to inform you that a meeting of the Board of Directors of the Company is scheduled to be held on Wednesday, November 01, 2023, inter alia, for the following items:

1) to take on record the unaudited financial results for the quarter and half year ended September 30, 2023;

2) to consider declaration of interim dividend."

According to Godrej's filing, if the Board declares an interim dividend at the above meeting, please note that the Record Date for ascertaining the names of the shareholders who will be entitled to receive the interim dividend will be Thursday, November 9, 2023.

This would also mean that Godrej Consumer's share price will turn ex-dividend on November 9.

Data from BSE showed that the last time Godrej Consumer share turned ex-dividend was in February 2020. The company paid Rs 2 dividends per share each in February 2020 and November 2019.

Trendlyne data showed that between October 2002 to February 2020, the company declared a whopping 72 dividends for its shareholders.

Coming to Q2, the company earlier this month gave an operational performance update ahead of its overall financial results which is due on November 1.

In its quarterly update (Q2FY24) released on October 5th, Godrej said "In India, we witnessed weak macros and adverse weather conditions during the quarter. Despite the tough operating environment, our organic business delivered steady performance with mid-single-digit volume growth. Overall, Home Care volumes grew in the mid-single digit while Personal Care grew in the low-single digit. The performance of Park Avenue and KamaSutra brands has improved sequentially and are on track to achieve full-year guidance."

Further, Godrej continued to deliver improving performance in its business in Indonesia during Q2FY24, while its Godrej Africa, USA, and Middle East (GAUM) continued its consistent performance with constant currency sales growth in mid-teens.

On a consolidated level (organic), Godrej at that time said, "we expect to deliver mid-single digit volume growth, double-digit constant currency sales growth and low single digit sales growth in INR terms. Sales growth (incl. inorganic) to be in mid-single digit in INR terms. We continue to drive healthy year-on-year expansion in EBITDA (incl. Forex) margin across key markets along with higher category development investments."

How Godrej will perform in Q2FY24?

According to Sharekhan's preview report, Godrej Consumer is expected to post weak performance in Q2FY2024, with the organic domestic business likely to register mid-single volume growth; home care volumes are expected to grow in mid-single digit; while the personal care segment is likely to grow in low single digit. On the international front, Indonesia would post double-digit value and volume growth, while Africa business's performance was affected by adverse currency translation impact.

Also, the company's gross margin is expected to expand by ~560 bps y-o-y, aided by a correction in input prices, while OPM is likely to be up by 250 bps y-o-y due to higher ad spends. It added, "Higher depreciation charges and interest expenses would lead to lower PAT
growth of ~12% y-o-y compared to 20% y-o-y operating profit growth."

Sharekhan has recommended buying on Godrej for a target price of Rs 1,250.

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.