Buy Godrej Consumer Products: Motilal Oswal
Motilal Oswal has recommended a buy rating on Godrej Consumer Products, in its report dated May 19, 2009.
“Godrej Consumer Products net sales grew 26% YoY to Rs 3.4 billion (v/s our estimate of Rs 3.1 billion). Gross margin declined 850bp YoY to 49.1% (up 760bp QoQ). However, lower ad-spend (510bp) pushed EBITDA margin up to 19.3% (14.1% in 3QFY09) v/s our estimate of 18.3%. Adjusted PAT grew 45% YoY to Rs 594 million (v/s our estimate of Rs 473 million) on higher interest income and lower tax rate (290bp). The company plans to expand its distribution and exploit synergies with other FMCG companies of Godrej Group which will enable it to accelerate growth in coming years. We are revising our EPS estimates by 14% for FY10 and 11% for FY11 to factor in stronger volume growth. The stock trades at 17.5x FY10E EPS and 15.1xFY11E EPS. Buy,” says Motilal Oswal’s report.
Tags: Buy Godrej Consumer, buy rating, buy stocks, Motilal Oswal
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