Earnings Outlook
Godrej Consumer consol PAT may surge 50%
This story was originally published at 10:32 IST on 16 July 2024
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By Avishek Rakshit
KOLKATA – Godrej Consumer Products Ltd is expected to report a 49.6% year-on-year surge in its consolidated net profit at 4.8 bln rupees for the quarter ended June, the average of estimates by eight brokerages showed. Its consolidated revenue is expected to rise by just 1.6% year on year at a little over 35 bln rupees.
On a sequential basis, the revenue is seen increasing 3.5%. The company had reported a loss of 18.9 bln rupees in the Jan-Mar period of the last financial year owing to muted revenue growth despite high sales volumes, and restructuring costs related to its African business. In the year-ago period, the company reported a net profit of 3.2 bln rupees on revenues of 34.5 bln rupees.
Among the brokerages, Motilal Oswal Financial Services Ltd pegged the net profit the highest at a little over 5 bln rupees, while Nuvama Wealth Management Ltd estimated the lowest at 4.5 bln rupees. Motilal Oswal Financial Services pegged the company's revenue the highest at 36.2 bln rupees, and the lowest was estimated by Kotak Institutional Equities at a little over 34 bln rupees.
The company is yet to declare when it will announce the financial results for the Apr-Jun period. The company’s annual general meeting is scheduled for Aug 7.
In a performance update to media earlier this month, Godrej Consumer Products said that operating conditions in India remained soft, but its business in the country performed well with high-single digit organic volume and mid-single digit value growth.
Reported growth will be double-digit in volume and high-single digit in value terms, the company said. The growth was broad-based across both home care and personal care products. Demand in household insecticides had been soft for earlier parts of the quarter due to extreme heatwaves across the country, Godrej Consumer Products said. The Park Avenue and KamaSutra brands are performing well after the portfolio simplification actions and are in line with the company’s full year growth ambition, the company statement said.
Godrej Consumer Products' business in Indonesia continued to deliver strong performance with high-single digit volume growth and double-digit constant currency sales growth. However, the Indonesian currency has seen high depreciation leading to lower growth in Indian currency terms, the company said.
According to the company, its African, US, and West Asian businesses are expected to see a double-digit volume decline largely led by West Africa due to a high base in the Apr-Jun period of the last financial year on account of appointment of a national distributor. The move had led to a one-time sell-in benefit and some tough pricing decisions in Nigeria, it said.
Also, there has been an additional impact driven by supply disruption in South Africa led by the shipping crisis. The currency in Nigeria continued to negatively impact the company’s global sales performance.
At a consolidated level, the company expects flattish sales, double-digit constant currency sales growth and double-digit earnings before interest, tax, depreciation, and amortisation growth for its organic business.
Brokerage Kotak Institutional Equities estimated a 7.0% volume and a 4.8% value growth for the company’s business in India. Nuvama Wealth Management Ltd said it expects the company’s domestic volumes to inch up 8%.
Godrej Consumer Products is expected to report an EBITDA of 7.5 bln rupees, according to the average of estimates by six brokerages. The range for EBITDA is seen at 7.3-7.8 bln rupees.
Brokerage Sharekhan Ltd, in a report, said that the gross margins are likely to expand by 180 basis points driven by stable input prices and better sales mix. Kotak Institutional Equities has modelled a 190-basis-point increase in the company's gross margins. However, on a sequential basis, gross margins are expected to decline by 125 basis points, according to Kotak Institutional Equities.
Nuvama Wealth Management said that it is expecting Godrej Consumer Products to post a gross margin expansion by 196 basis points and EBITDA margin expansion by 193 basis points.
At 0927 IST, shares of Godrej Consumer Products traded 0.4% higher at 1,443 rupees on the National Stock Exchange.
Following are the Apr-Jun earnings estimates of Godrej Consumer Products based on reports compiled by Informist from eight brokerage houses:
Broker Name | Net Sales (in mln rupees) | Net Profit (in mln rupees) | EBITDA (in mln rupees) |
Anand Rathi Share and Stock Brokers Ltd | 34,834.00 | 4,639.00 |
|
Emkay Global Financial Services Ltd | 35,124.00 | 4,796.00 | 7,281.00 |
Incred Research Services Pvt Ltd | 35,136.00 | 4,577.00 | 7,315.00 |
Kotak Institutional Equities | 34,017.00 | 4,663.00 | 7,343.00 |
Motilal Oswal Financial Services Ltd | 36,216.00 | 5,019.00 | 7,845.00 |
Nirmal Bang Equities Pvt Ltd | 35,179.00 | 5,016.00 | 7,669.00 |
Nuvama Wealth Management Ltd | 35,196.00 | 4,543.00 | 7,638.00 |
Sharekhan Ltd | 34,640.00 | 4,900.00 |
|
Average | 35,042.75 | 4,769.13 | 7,515.17 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Akul Nishant Akhoury
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