STOCK IN FOCUS
* Godrej Consumer Products (GCPL) closed 2.5% higher in trade today at Rs1003 compared to 0.7% drop in the benchmark Nifty.
* GCPL is the market leader in domestic hair colour and Household insecticide segment with marquee brands like GoodKnight, Hit, Godrej Xpert and is the second largest player in the soaps market with brands like Cinthol and Godrej No.1
* GCPL also has presence in emerging economies of Asia, Africa and Latin America, which account for close to half of GCPL’s consolidated sales.
* We expect recovery in the domestic business in the coming quarters on the back of good monsoons, trade stabilisation post GST rollout and benign input cost environment.
* Strong new product pipeline, recovery in international business and improving product-mix should enable GCPL to post 13% revenue and 18.5% earnings CAGR through FY17-19E.
* Based on EPS of Rs27, the stock currently trades at 37x FY19E earnings. We have a BUY rating on the stock with target price of Rs1120.
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