Godrej Consumer Products - 1QFY2013 Result Update - Angel Broking

Godrej Consumer Products Ltd (GCPL), in its 1QFY2013 results, reported an impressive top-line growth of 39.2% yoy to Rs.1,389cr. The Indian subcontinent business registered a growth of 23% yoy on account of a robust growth in homecare and personal wash segments. The international business registered an organic growth of 31%, aided by an impressive performance from Indonesia and LatAm as well as due to favorable impact of INR depreciation.

Key highlights of the quarter: The Company reported a robust growth in its homecare and personal wash categories, growing by 27% and 42% yoy respectively. On the operating front, the company reported a 126bp yoy decline in margin to 14.3%. The recurring PAT for the quarter grew by 30.3% yoy to Rs.130cr. However, the reported profit declined y-o-y on account of a higher base (due to one-time exit compensation of Rs.156.2cr related to use of Kiwi license). During the quarter, the company entered the air fresheners category with the launch of AER.

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. The acquisition of Darling Group, the market leader in hair extension products in the African continent, and Chile based Cosmetica Nacional will continue to drive strong growth for the company in Africa and LatAm. At the current market price, the stock is trading at 23.8x FY2014E consolidated earnings. After valuing the company's various international subsidiaries and giving effect to their varied geographic presence, we believe the current implied valuation of the standalone business is at fair levels. We maintain our Neutral rating on the stock.

Source : Equity Bulls

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