Godrej Consumer Products Ltd (GCPL) is one of India’s leading home-grown household and personal care company. It has presence in countries like Indonesia, Africa, Latin America, UK, among others. Its portfolio is spread across Home Care (39%), Personal Wash (26%), Hair Care (24%) & Other categories (11%).
Valuation and view
Driven by its leadership status in its core areas coupled with innovation, cross pollination and enhanced rural reach, GCPL is expected to drive growth in the domestic business in the coming years. Moreover, its strategy of expanding overseas horizon also augurs well for the company. We expect the top-line and bottom-line to grow at a CAGR of 14% and 25% over FY15-FY17E. At the CMP of Rs. 1,233, GCPL is attractively placed at a P/E of 36.1x and 29.6x for FY16E and FY17E. Considering the above aspects, we rate the stock as ‘BUY’ assigning a forward P/E of 34x with a target price of Rs. 1,416 which implies a potential upside of ~15% for the coming 12 months.
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