This Large Cap FMCG Stock To Give Potential 23% Return, Motilal Oswal Suggests Buy

Leading brokerage firm Motilal Oswal has recommended investors to buy the FMCG stock, Godrej Consumer Products Ltd. If you buy Godrej Consumer now at the current market price of Rs 815 apiece, you will get a potential return of 23%. The company has a market capitalisation of Rs 83,380.54 crore. Check key takeaways below:

1. Godrej Consumer Stock Outlook

The current market price of the stock is Rs 815 apiece with 52-week high at Rs 985 apiece and 52-week low at Rs 660 apiece, respectively.

2. Godrej Consumer Return

The stock has given a return of 25% in last 5-years, 11% in last 3-years, and declined 15% in last 1-year.

3. Godrej Consumer Q2 FY23 Results

Godrej Consumer (GCPL) declared an in-line set of numbers in its 2QFY23 results. While there was some sequential gains on the gross margin front in results. While there was some sequential gains on the gross margin front in higher gross margin gains in 2HFY23E and FY24E.

The company is using part of the gains to bolster its ad-spends (up ~50% YoY in 2QFY23, bucking the trend of peers for the quarter) to boost medium-term revenue growth prospects.

4. Godrej Consumer Valuation

According to Motilal Oswal, "The management retained its double-digit sales growth target in the current year and medium-term sales outlook is also attractive. This along with steep material cost reduction is likely to lead to extremely strong earnings growth from 4QFY23. Balance sheet improvements are also remarkable with 25% SKU reduction in India contributing to doubling of India business operating cash flows (OCF) YoY. Maintain BUY."

With investments by the new CEO focused on boosting growth in the high margin, high-RoCE domestic business, GCPL's medium-term earnings growth outlook is strong as highlighted in our recent detailed CEO meet note. Valuation at 36x FY24E EPS is inexpensive and is at a steep discount to staples peers. We maintain our BUY rating with a TP of INR1,005 (premised on 40x Sep'24E EPS), added Oswal.

5. Godrej Consumer About

Godrej Consumer Products Ltd is one of the leading Fast Moving Consumer Goods (FMCG) companies in India. The company is the market leader in personal, hair, household and fabric care segments.

It has its manufacturing facilities at Malanpur in Madhya Pradesh, Baddi in Himachal Pradesh, Guwahati in Assam and Namchi in Sikkim. It operates in two segments namely soaps and personal care.

Disclaimer

The stock has been picked from the brokerage report of Motilal Oswal. 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.