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IDBI Capital Is Positive On This Large Cap FMCG Stock, Suggests Buy For 19% Gains, Promising Outlook

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A leading brokerage firm, IDBI Capital has given a 'buy' call to Godrej Consumer Products Ltd for a target price of Rs 1,017 per share. Godrej Consumer Products Ltd. is a large cap FMCG company with a Pan India presence. Brokerage in the report has stated that the appointment of new leadership; Mr Sitapati in India and Mr Sethuraman in Indonesia, shall be helpful to drive muted HI and Indonesia business. Over the next 3-5 years Godrej Consumer Products aims to achieve double-digit volume growth driven by penetration, market share gains, radical simplifications (reducing SKUs, centralizing category development etc) and disruptive innovations. Access packs, media spends and focus on general trade should aid recovery in HI and Indonesia.

 

Stock Outlook & Performance

Stock Outlook & Performance

Today, the stock of the company opened at Rs 859 apiece, the previous close was Rs 859.05 apiece. The Current Market Price (CMP) is Rs 859.60 apiece. It recorded the 52-week low at Rs 660.05 apiece on 8th March 2022, and the 52-week high at Rs 1,138 apiece on 15th September 2021.

Godej Consumer Products in last 1 week has gained 0.44%, and 18.6% in alst 1 month, respectively. Howeevr, it has not given any positive retruns in last 1 years and delclined 8.88%. Ove rthe last 3 and 5 yeras, it shares price witnessed a share jump of 37.01% and 34.56%, respectively. In long-term investment tenure, the stock has performed good and given decent returns to shareholers.

Taking into account the company's CMP and the anticipated target price of Rs 1,017 apiece, the stock has a potential gain of 19% over the next 12 months.

Double-digit volume growth
 

Double-digit volume growth

Godrej Consumer Products aims to achieve double-digit volume growth driven by (i) penetration (top 4 GCPL products which contributes c. 60% of profit are <20% penetrated) (ii) market share gains (by higher media spends and launch of access packs) (iii) simplifying focus (reducing SKUs, centralizing category development).

Different strategy for retail expansion in urban and rural

Different strategy for retail expansion in urban and rural

Godrej Consumer Products aims to reach 7 mn outlets during FY22-23 driven by penetration in general trade. In urban India store expansion will be based on opportunity-based micro segmentations while in rural India; GCPL aims to reach villages with <3,000 population through B2B JV.

IDBI Capital Maintain a BUY rating with a Target Price of Rs 1,017 per share

IDBI Capital Maintain a BUY rating with a Target Price of Rs 1,017 per share

The brokerage said, "E-com now contributes 5% of India revenue. Driven by the success of the last 2 online-only products; the launch of Goodknight Mosquito Net is positive. Retail expansion to be driven by micro-segmentation in urban India and B2B JV in rural India. We maintain BUY with a Target Price of Rs 1,017."

It added, "We maintain Godrej Consumer Products as one of our high conviction idea. Recovery in HI segment and Indonesia under new management shall be key triggers. We value Godrej Consumer Products at 45x FY23E EPS."

About - Godrej Consumer Products Limited

About - Godrej Consumer Products Limited

Godrej Consumer Products Ltd is one of the leading Fast Moving Consumer Goods (FMCG) companies in India with a market capitalization of Rs 87,941 crore. The company has five product segments namely Household Insecticides Soaps Hair Colours Liquid Detergents and Air Fresheners. The company has manufacturing facilities at  Guwahati in Assam,  Baddi in Himachal Pradesh, Malanpur in Madhya Pradesh, and Namchi in Sikkim. The company has established a strong international presence through a slew of acquisitions over the years. Godrej Consumer Products Ltd is among the largest household insecticide and hair care players in emerging markets. In household insecticides it is the leader in India and the second largest player in Indonesia.

Disclaimer

The stock has been picked from the brokerage report of IDBI Capital. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.

Story first published: Tuesday, July 19, 2022, 13:21 [IST]
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