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Motilal Oswal Report
Godrej Consumer Products Ltd.'s FY20 Annual Report analysis highlights a muted operating performance. Ebitda increased marginally by 1.2% to Rs 21.4 billion, primarily due to the outbreak of Covid-19.
The India and GAUM (Godrej Africa, US, Middle East) businesses were impacted, while Indonesia delivered robust growth.
The company recognized exceptional loss of Rs 0.8 billion, primarily on account of the impairment of goodwill/intangibles.
We note that the company changed the estimates for carrying out the impairment evaluation of intangibles/goodwill, which stood at Rs 79.7 billion -- 101% of net worth.
The company's earnings to cash flow conversion declined to 90% (FY19: 102%) on account of increased working capital requirements in India and Africa.
Operating cash flow post-interest declined to Rs 14.4 billion (FY19: Rs 15.1 billion).
Standalone return on capital employed (ROCE) declined to 65% (FY19: 86%) due to a weak operating performance, coupled with an increase in capital intensity (financed partially by incremental debt).
This led to consolidated RoCE declining to 18.7% (FY19: 20.1%).
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