Earnings Outlook
Higher volumes to push Godrej Consumer PAT up 14% on year
This story was originally published at 16:29 IST on 16 October 2024
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By Avishek Rakshit
KOLKATA – Godrej Consumer Products Ltd. is expected to report a consolidated net profit of INR 4.9 billion for Jul-Sept, up 14.2% from a year ago on the back of higher volumes, according to an average of estimates from 10 brokerages. The company, which has a diversified portfolio of home and personal care products, is expected to report a consolidated revenue of INR 36.6 billion during the quarter, up 1.5% from a year ago, according to the average of the estimates.
Sequentially, the company’s net profit and revenue are expected to rise 9.7% each. The company reported a net profit of INR 4.3 billion on revenue of INR 36.0 billion a year ago and a net profit of INR 4.5 billion on revenue of INR 33.3 billion in Apr-Jun.
Godrej Consumer Products will announce results for the September quarter on Oct. 24.
Among the brokerages, Antique Stock Broking has projected the highest net profit for Godrej Consumer Products in Jul-Sept at INR 5.3 billion and Nuvama Wealth Management the lowest at INR 4.7 billion. The estimates for revenue range from INR 34.5 billion by Nuvama Wealth Management and INR 39.1 billion by KR Choksey Research.
Kotak Institutional Equities said that it expects Godrej Consumer Products to report a 7.5% growth in volumes in the domestic business and 8.5% growth in value terms because of price increases in some of the products. The overall revenue growth is expected to be led by a 4% growth in home improvement products and a 7% growth in personal hygiene products. Hair colours and air fresheners are also poised to register good growth, Kotak said.
Motilal Oswal Financial Services shared a similar view and pegged the domestic volume growth at 7% and domestic revenue growth at 9%. The brokerage said Godrej Consumer Products has not taken much price hikes in the soap category compared to the market leader Hindustan Unilever Ltd. At a consolidated level, taking into consideration the ongoing stress in the African business, Motilal Oswal Financial Services expects Godrej Consumer Products to report a 2% growth in consolidated revenue.
Nuvama Wealth Management expects the consolidated revenue to decline by 4.3%. Though it expects Godrej Consumer Products to report a 6% growth in sales volume and 8% growth in value terms in the domestic business, the business in Africa could drag down overall revenue growth.
Some brokerages noted that while its business in Indonesia is likely to clock mid-to-high single-digit revenue growth in rupee terms, earnings before interest, tax, depreciation, and amortisation from Indonesian operations are likely to grow in the range of 16–19%. However, in Africa, revenues are expected to decline on account of the Naira devaluation, divestment of the East African business and pipeline correction in inventory. While Kotak Institutional Equities pegged a decline of 25% from African revenues, Nuvama Wealth Management said the fall will be in double-digits.
Godrej Consumer Products is expected to report earnings before interest, tax, depreciation, and amortisation of INR 7.6 billion, according to the average of estimates of eight brokerages. The estimates on EBITDA range from INR 7.4 billion by Emkay Global Financial Services and INR 8.0 billion by KR Choksey Research.
Kotak Institutional Equities projected the company’s consolidated gross margins to rise to 56.2%, a 65-basis-point increase from a year ago but down 35 bps sequentially. EBITDA margin is expected to expand by 135 bps to 21.0%, the brokerage said.
Last week, Godrej Consumer said it expects consolidated EBITDA growth in Jul-Sept to be low due to high palm oil prices and competitive pressures. The company expects its business in India to have high single-digit underlying volume and value growth. Godrej Consumer said it expects the standalone EBITDA growth to be flat as the company has decided not to pass on the entire cost hike to consumers in one step and continue investments in long-term growth initiatives.
Following are the Jul-Sept earnings estimates of Godrej Consumer Products based on reports compiled by Informist from 10 brokerage houses:
Broker Name | Net Sales (in INR million) | Net Profit (in INR million) | EBITDA (in INR million) |
Anand Rathi Share and Stock Brokers Ltd | 37,820.00 | 4,765.00 |
|
Antique Stock Broking Ltd | 35,484.00 | 5,307.00 | 7,629.00 |
Elara Securities (India) Pvt Ltd | 34,788.00 | 5,206.00 | 7,459.00 |
Emkay Global Financial Services Ltd | 36,134.00 | 4,900.00 | 7,441.00 |
Kotak Institutional Equities | 35,841.00 | 4,901.00 | 7,472.00 |
KR Choksey Research | 39,053.00 | 5,014.00 | 8,002.00 |
Motilal Oswal Financial Services Ltd | 36,901.00 | 4,814.00 | 7,477.00 |
Nirmal Bang Equities Pvt Ltd | 37,824.00 | 5,043.00 | 7,678.00 |
Nuvama Wealth Management Ltd | 34,471.00 | 4,686.00 | 7,582.00 |
Sharekhan Ltd | 37,230.00 | 4,790.00 |
|
Average | 36,554.60 | 4,942.60 | 7,592.50 |
At 1528 IST, shares of Godrej Consumer Products traded at INR 1,358.60 on the National Stock Exchange, up 1.2% from the previous closing. End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Saji George Titus
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