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Godrej Consumer Products 1QFY2015 performance highlights and results update

August 1, 2014, Friday, 10:57 GMT | 05:57 EST | 14:27 IST | 16:57 SGT
Contributed by Angel Broking

For 1QFY2015, Godrej Consumer Products (GCPL) posted a slightly lower performance, both on the top-line and bottom-line front, impacted by slowdown in the domestic market. The numbers were impacted, mainly owing to an under performance of the Soaps segment. However, on the international business front, the company reported a 17% yoy growth which was supported by Indonesia, Latin America and Europe markets.

Key highlights of the quarter: For 1QFY2015, GCPL’s top-line grew 9.4% yoy to Rs.1,889cr. The company’s domestic business posted a revenue growth of 6% yoy. The Soaps segment posted a weak top-line growth of 2% yoy. The Hair Colour segment grew ~14% yoy despite of a high base of the corresponding quarter of the previous year; the growth was predominantly volume driven. Household Insecticides witnessed a lower growth of 9%, being impacted by delayed monsoons.

Despite macroeconomic challenges in international geographies, the company reported strong numbers on the top-line front. Indonesia, Africa, Europe and Latin America posted top-line growths of 21%, 12%, 26% and 21%, respectively. For the Indonesian business, the OPM came in at 15%, driven by calibrated price increases, implementation of cost saving projects and due to an improved mix. The company’s Africa business posted a margin expansion of 100bp. However, Europe and Latin American businesses were not able to report improvement in margins due to upfront marketing investments.

Outlook and valuation: Going ahead we expect GCPL’s consolidated top-line and bottom-line to grow at a CAGR of 15.7% and 18.0%, respectively, over FY2014-16E. At the current market price, the stock is trading at 27.2x FY2016E consolidated earnings. We maintain our Accumulate rating on the stock with target price of Rs.933.