Motilal Oswal has a neutral rating on Godrej Consumer Products with a target price of Rs 620.
The stock ended down 6.4 per cent at Rs 557.25 on Monday while the BSE Sensex closed -469.60 points down (-1.51 per cent) at 30,690.02.Godrej Consumer Products Ltd., incorporated in 2000, has a market cap of Rs 56968.58 crore.Investment RationaleApart from the Covid-19 led lockdown challenges, which is more of a short-term phenomenon, the loss of dominance in hair colour, the advent of unorganised incense stick players and weak execution in the Africa business remain key concerns, said Motilal Oswal.
Given the weak earnings outlook and inferior RoCE, valuations of 34.5 times on FY22 estimates EPS appears fair, said Motilal Oswal.
FinancialsGodrej Consumer Products' key products/revenue segments include Home Care which contributed Rs 2834.32 crore to sales value (49.90 per cent of total sales); Personal Care which contributed Rs 2042.57 crore to sales value (35.96 per cent of total sales); Hair Care which contributed Rs 679.90 crore to sales value (11.97 per cent of total sales); Other Operating Revenue which contributed Rs 122.52 crore to sales value (2.15 per cent of total sales)for the year ending March 31, 2019.
For the quarter ended December 31, 2019, the company reported consolidated sales of Rs 2755.08 crore, up 5.63 per cent from last quarter sales of Rs 2608.15 crore and up 2.10 per cent from last year same quarter sales of Rs 2698.50 crore.
The company reported net profit after tax of Rs 444.63 crore in the latest quarter.