Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Maintain ADD on Godrej Consumers - Miss in 4Q margin; inspiring addition to team - HDFC Securities

Posted On: 2021-05-13 16:16:38 (Time Zone: UTC)


Mr. Varun Lohchab, Institutional Research Analyst, HDFC Securities and Mr. Naveen Trivedi, Institutional Research Analyst, HDFC Securities

GCPL's 4QFY21 was a mixed bag with in-line revenue but a miss in EBITDA. Consolidated revenue registered 27% YoY growth (HSIE 26%). Domestic revenue/EBITDA grew by 35/10% YoY, while international revenue/EBITDA grew by 20/34%. Domestic/international revenue posted 5/6% 2-year revenue CAGR. Domestic volume growth was at 29%, 4% 2-year CAGR. Cost restoration was quicker than expected in 4Q; hence, EBITDA margin contracted by 108bps YoY to 21% (HSIE 23%) despite a favourable base. EBITDA grew by 21% YoY (flat 2-year CAGR) vs. HSIE 32%. GCPL was on margin expansion trajectory and posted 100bps YoY EBITDA margin expansion during 9MFY21, but missed in 4Q. However, the hiring of the new CEO Sudhir Sitapati (from HUL) was the showstopper. He brings vast experience (22 years) in working with one of the world's most well run companies - Unilever. Sudhir can introduce various required changes in GCPL management, which are necessary to drive both domestic and international business. Since the past one year, GCPL has renewed its focus on growth and market share gain. Thus, the addition of Sudhir to the team further empowers the growth focus of the company and gives us more confidence on earnings longevity. Hence, we increase our target P/E multiple to 42x (38x earlier) on Mar-23E EPS and drive TP of INR 925. Maintain ADD.

In-line revenue, GUAM & LATAM standout: Consolidated revenue up by 27% (HSIE 26%) with domestic up by 35% (HSIE 30%) and international up by 19% (HSIE 21%). Home Care posted 34% YoY growth (6% 2-year CAGR), Soaps 41% YoY growth (4% 2-year CAGR) and Hair Colour 25% growth (-2% 2-year CAGR). The Indonesia business remained slow and clocked 5% YoY growth. GUAM sustained momentum and posted 30% growth (36% cc). LATAM and SAARC registered 30% growth (54% cc). In FY21, revenue grew by 11% (-4% in FY20) with domestic growth of 14% (-4% in FY20) and international growth of 8% (-4% in FY20). In FY21, HI clocked 15% growth, Hygiene 24%, Hair Colour 14% while others category was down by 8%.

Miss in margin: Gross margin contracted by 198bps YoY to 55.7% (-97bps in 4QFY20, -167bps in 3QFY21) vs. HSIE 56.9%. Employee cost was up by 38% YoY (-16% in 4QFY20), A&P 51% YoY (-20% in 4QFY20) and other expenses 8% (-5% in 4QFY20). EBITDA grew by 21% YoY (flat 2-year CAGR) vs. HSIE 32% growth. Indonesia and GUAM EBITDA margins expanded by 230bps and 710bps YoY. LATAM & SAARC EBITDA margin contracted by >400bps YoY. EBITDA margin expansion was strong in 9MFY21 with 100bps YoY expansion. Despite challenges in FY21, EBITDA registered 14% growth.

Call and BS/CF takeaways: (1) The company remains growth focused, and the mandate for the new CEO will be the same; (2) launch pace will continue; (3) HI growth was across premium and burning formats; (4) e-commerce saliency at 4%; (5) hygiene growth driving by a structural change; (6) market share gain continued in soaps, where the company is now the second largest player (low teens share); (7) FCF was INR 18.5bn vs. INR 14.4bn in FY20.

Shares of GODREJ CONSUMER PRODUCTS LTD. was last trading in BSE at Rs.874.8 as compared to the previous close of Rs. 715.95. The total number of shares traded during the day was 1290309 in over 38062 trades.

The stock hit an intraday high of Rs. 894.9 and intraday low of 750.15. The net turnover during the day was Rs. 1118182116.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.


Other Headlines:

CESC Q4FY21 Results Review Report - Loss decline, strong CF make valuation attractive - HDFC Securities

White Goods & Durables - Analysis of pressure cooker market: TTK Prestige is key beneficiary - ICICI Securities

CESC - Good earnings in a challenging environment - ICICI Securities

Somany Ceramics - Walking the talk - ICICI Securities

DB Corp - Rise in newsprint price adds to risk - ICICI Securities

CEAT - Market share ambitions remain strong - ICICI Securities

Consumer Staples & Discretionary - Worm's world view #32: Conversations with paint dealers regarding price hikes - ICICI Securities

Oil & Gas - Oil, gas & spot LNG surge to bring gains for GAIL & OIL - ICICI Securities

Asset Management Companies - Positive trends to support earnings - ICICI Securities

Q4FY21 Result Update - Lemon Tree Hotels - ICICI Direct

Q4FY21 Company Update - Globus Spirits - ICICI Direct

Q4FY21 Result Update - DB Corp - ICICI Direct

Q4FY21 Result Update - Somany Ceramics - ICICI Direct

KEC International: Company Update - Building on diversification - HDFC Securities

LIC Housing Finance - Q4 FY21 Result Update - YES Securities

Entertainment Network Ltd - Beating on solutions business - ICICI Securities

Asahi India Glass - Operating leverage, product mix aid margins - ICICI Securities

Whirlpool of India - Market leading revenue growth - ICICI Securities

Lemon Tree Hotels - Wait for recovery gets longer - ICICI Securities

LIC Housing Finance - Stupendous growth momentum; needs to shore up provisioning and capital buffer - ICICI Securities

Quant Pick - Bank of Baroda - ICICI Direct

Company Update - Amara Raja Batteries - Investor Event Outcome - ICICI Direct

Q4FY21 Result Update - Bhel - ICICI Direct

Q4FY21 Company Update - NRB Bearings - ICICI Direct

CESC - Q4FY21 First Cut - ICICI Direct

Q4FY21 Result Update - Entertainment Network India - ICICI Direct

LIC Housing Finance Results Review Report - Balance sheet beefs up; P&L to stay soft - HDFC Securities

Jubilant FoodWorks 4QFY21 Results Review Report - Missing excitement; recovery priced in - HDFC Securities

BFSI Sector Update - MFI Consultation Paper Takeaways - Incrementally positive for NBFC-MFIs - HDFC Securities

Q4FY21 Result Update - JK Cement - ICICI Direct

Q4FY21 Result Update - Minda Industries - ICICI Direct

Stock Tales - Indo Count Industries - ICICI Direct

IPO Review - Krishna Institute of Medical Sciences Ltd - ICICI Direct

Q4FY21 Company Update - Greenply Industries - ICICI Direct

IPO Review - Dodla Dairy Ltd - ICICI Direct

Lemon Tree Hotels - Q4FY21 First Cut - ICICI Direct

Jubilant Foodworks - Q4FY21 investor call takeaways - YES Securities

Greenply Industries Ltd - Q4 FY21 Result Update - YES Securities

Whirlpool of India Ltd - Q4 FY21 Result Update - YES Securities

New India Assurance Report - CoRs disappoint yet again - HDFC Securities

Maintain BUY on Kajaria Ceramics - Performance shines through; outlook bright - HDFC Securities

Retain ADD on Deccan Cement - Volume strong; high other expense dents margin - HDFC Securities

Reiterate ADD on NHPC - Lower generation impacts earnings - HDFC Securities

Maintain BUY on JK Cement - Robust volume and utilisation - HDFC Securities

Maintain BUY on DLF - Gaining traction - HDFC Securities

Maintain BUY on Capacite Infraprojects - Marginal miss - HDFC Securities

DLF Ltd - Q4 FY21 Result Update - YES Securities

Greenply Industries Ltd - Q4FY21 first cut - YES Securities

Coal India - Coal makes a comeback - ICICI Securities

Kajaria Ceramics - Q4FY21 beat largely priced in - ICICI Securities


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020