Godrej Consumer Products - Hold

BSE Index Analysis, Securties , Standard Experts 

Godrej Consumer Products : 

Another Quarter of 30% Revenue Growth.

Reco : Hold    

Cmp : 550   

Target : 550

Godrej Consumer Products (GCPL) quarterly performance was in line with estimates led by strong growth in its international business. The company reported consolidated revenue at Rs 13.2 bn (up 31% vs. 34% est.), EBITDA at Rs 2.5 bn (up 44%, vs. 32% est.) and adj. PAT at Rs 1.8 bn (up 31% vs. 28% est.) in Q4FY12.

Revenue momentum continues: GCPL reported yet another quarter of over 30% revenue growth driven by 

(a) 49% growth in its International Business (38% of revenue). Growth here was driven by Indonesian subsidiary Megasari (30% YoY growth; 50% of international revenue) and its acquisition Darling Group of Africa; 

(b) domestic operations (62% of revenue) grew 20% YoY led by 30% growth in soaps and 28% growth in household insecticides.

Price hikes aid margin improvement but cost pressures rising: Gross profit margin improved 250 bps YoY driving 170 bps improvement in EBITDA margin. GCPL has taken over 12% YoY price hikes (vs. 15% increase by industry) in soaps to offset the rise in palm oil prices.