Shares of Godrej Consumer Products rose 6 percent intraday to Rs 948 on December 21, breaking a four-day losing streak.

At 12:27 hrs, Godrej Consumer Products was quoting at Rs 929.10, up Rs 40.75, or 4.59 percent on the BSE.

 

The stock touched a 52-week high of Rs 1,138.50 and a 52-week low of Rs 644 on 03 September, 2021 and 24 February, 2021, respectively.

Currently, it is trading 18.39 percent below its 52-week high and 44.27 percent above its 52-week low.

After maintaining a neutral view on GCPL for 10 years, we turned bullish on its prospects earlier in FY22.

 

After the appointment of Sudhir Sitapati as CEO in May, the stock touched a high of Rs 1,139 in September, and has subsequently corrected by ~22%.

Subsequently, valuations of 40.4x FY23E EPS are attractive, given the potential earnings growth of over 15% (after a breather in the near term on account of transient commodity cost pressures). Valuations are at a significant discount to its staples’ peers on an

There is no change to our EPS forecasts. We maintain our buy rating on the stock with a target price of Rs 1,150 per share (valuing it at 45x Mar’24E EPS), implying an upside of 30% from current levels.

Sharekhan

Under the new leadership, the company’s immediate focus is to fill the gaps to achieve sustainable double-digit volume growth in the medium term.

Increased penetration, cross pollination, simplifying business in key markets, and increased distribution reach are some of the key growth drivers in the medium term.

Success of the revamped strategies with sustained double-digit growth will be a key trigger for valuations to improve in the coming years.

We maintain our buy recommendation on the stock with an unchanged price target of Rs 1,249.

Emkay

The management aims to achieve double-digit volume growth on the back of category development and penetration gains.

GCPL will focus more on core, with fewer but bigger innovations, more global collaboration and higher investments for category development. However, it highlighted a cautious outlook in the short term due to unprecedented inflation and lower volume growth.

The management’s steps appear to be in the right direction, but given near-term pressure on earnings, we see limited upside potential.