Godrej Consumer Q1 Review - Steady India Recovery; Currency Impacts International Business: Motilal Oswal

Motilal Oswal Report

Godrej Consumer Products Ltd. reported a 3% YoY decline in consolidated net revenue to Rs 33.3 billion (estimate: Rs 36.3 billion). In constant currency, revenue grew 11% YoY. India business clocked 9% YoY revenue growth (6% organic) with healthy volume growth of 8% YoY.

In India, home care and personal care segments registered 8% and 6% YoY growth, respectively. Household insecticide category was stable and saw low single-digit volume growth, impacted by heatwaves. Personal-wash saw low single-digit volume growth but sustained market share gains. Hair color volume growth was flat due to fewer wedding dates. Raymond Consumer Care Ltd. revenue was Rs 1.53 billion.

International performance was hit by unfavorable currency. Indonesia revenue was up 3% YoY (11% in CC) with healthy underlying volume growth of 7%. Godrej Africa, the U.S., and the Middle East revenue was hit by the devaluation of Naira and streamlining of trade inventory. GAUM organic revenue declined 25% (-10% in cc terms).

Godrej Consumer posted strong volume growth in FY24 and aims to achieve high singledigit growth in FY25. The company keeps expanding its total addressable market and looks to gain share in rural markets and all channels. Under project Vistaara 2.0, the company plans to double its outlet coverage and triple its village coverage.

A price hike in India business will improve its revenue trajectory in the coming quarters. We believe the growth uptrend in India business and an improving operating margin print will help Godrej Consumer sustain healthy earnings growth in FY25.

We reiterate our Buy rating with a target price of Rs 1,700 (based on 60 times June-26E earnings per share).

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