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Motilal Oswal Report
Godrej Consumer Products Ltd.'s consolidated revenue and operating profit were in line with our estimates. adjusted profit after tax missed our estimate by 9.7% YoY, owing to higher tax rate.
Godrej Consumer's margin expanded by 700 basis points YoY/80 bps QoQ to 54.9%. Notably, Ebitda margin improved 320 bp YoY despite a 29% rise in consolidated ad-spends.
Raymond Consumer Care Ltd. sales improved significantly QoQ to Rs 1.42 billion. Brand integration is largely finalised, and cost synergies are anticipated in H2 FY24. Management expected Raymond Consumer Care business Ebitda to be positive in FY24 despite the scaling up of media investment and it is on track to achieve their full-year targets.
Healthy earnings growth (Ebitda/profit after tax compound annual growth rates in mid-20s over FY23-FY25E) is likely to be driven by:
superior growth in highly profitable markets such as India and Indonesia;
volume growth; and
consistent capacity enhancement through capex in the organic portfolio.
We reiterate our 'Buy' rating with a target price of Rs 1,150 (based on 45 times FY25 earning per share).
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