Godrej Consumer Products - Result Update 4QFY2012 - Angel Broking

Godrej Consumer (GCPL) posted a strong set of numbers for the quarter, above our estimates. Consolidated top-line growth came in at 30.9% yoy. The Indian subcontinent business grew by healthy 21% yoy, led by double-digit growth across all three categories – household insecticides, soaps and hair colors. On the international business front, Indonesia, Europe and LatAm grew strongly. We maintain our Neutral view on the stock.

Key highlights of the quarter: GCPL's consolidated top line grew by 30.9% yoy, with domestic sales and international business posting healthy double-digit growth. The quarter saw robust growth in its household insecticides and soaps categories, growing by 28% and 30% yoy, respectively. On the operating front, the company reported a 173bp increase in margin to 18.8%. Recurring PAT for the quarter grew by 21.9% yoy to Rs.173cr.

Outlook and valuation: GCPL's recent acquisitions have been in-line with its 3X3 strategy and are expected to enable the company to spread its footprint and grow inorganically. During 3QFY2012, GCPL completed the acquisition of 51% stake in Darling Group's operations in South Africa, Nigeria and Mozambique. GCPL's acquisition of Darling Group, the market leader in hair extension products in the African continent, is expected to provide a strong impetus to its future growth. At the CMP, the stock is trading at 19.2x FY2013E earnings of Rs.27.2. We maintain our Neutral rating on the stock.

Source : Equity Bulls

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