Systematix' report mentions that palm oil inflation is expected to ease in the second half of the year, which should help in margin recovery. Godrej Consumer also took price cuts in Indonesia to maintain competitiveness in a weak macro environment.
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Systematix Report
We keep our FY26E-FY27E revenue estimates for Godrej Consumer Products Ltd. largely unchanged and lower EPS estimates by 4-5% to factor in near-term margin headwinds. We introduce FY28E estimates, and now build FY25-28E revenue/EPS CAGR of 10%/14%.
We maintain our Buy rating; we roll over valuation to June-2027E (from March-2027E) and value the stock on P/E of 54x (in-line with its current one-year forward P/E and long-period average), resulting in a revised target price of Rs 1,410 (vs Rs 1,420 earlier).
We like Godrej Consumer's relatively stronger performance across categories; aggressive interventions in pricing, innovations and category penetration; outlook on mediumterm growth pickup and potential for margin improvement.
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