Godrej Consumer Products - Scaling Up Domestically, Simplifying Its International Business; Buy: Anand Rathi

Anand Rathi Report

Godrej Consumer Products Ltd.’s efforts to simplify its international business, drive innovation-led growth and better margins are likely to lead to good growth momentum. Its launches (a liquid detergent and new molecule-based [RNF] home insecticide) would aid its domestic growth.

Also, divestment of its east Africa operations would boost profits (Rs 500 million annual accretion from royalties versus losses/low profits earlier).

We are optimistic about its healthy earnings growth (a 22% compound annual growth rate over the next two years) and retain a Buy, with a 12-mth target price of Rs 1,360 (Rs 1,350 earlier), 48 times FY26e earnings per share.

Key risks:

Failed launches, pricey bolt-on acquisitions, geopolitical turbulence shrinking its international business.

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